Thursday, November 19, 2009
Try to save...atleast for your children
CIT Group Says Bankruptcy Plan Wins Wide Support
NEW YORK (Reuters) - CIT Group Inc
The New York-based company said it was won "substantially in excess" of the minimum support needed under U.S. bankruptcy law to restructure from all classes of bondholders eligible to vote on its "prepackaged" Chapter 11 plan.
CIT on November 1 filed one of the five largest bankruptcies in U.S. history, hoping to reduce debt by $10 billion.
Hundreds of thousands of small- and mid-sized businesses depend on CIT for financing, and company lawyers have said CIT has a "need for speed" in getting through bankruptcy on concern that many customers could defect if the process drags on.
More Members of Middle Class file for Bankruptcy
Posted by: Scarlett Lu
Many middle class members have filed for bankruptcy. Among them are college educated and owners of homes. More than 100,000 middle class families have filed bankruptcy every month in 2007. The bankruptcy filings are warning risk that people can no longer count on their college education, good job, or home ownership in protecting them from a financial collapse. However, some highly educated have never been unemployed. There are many factors that cause bankruptcy these factors include poor saving habits, health problems, and excess spending.
Some people thought that having a home will save them from bankruptcy however, it does not. Many people had to file bankruptcy in order to pay for medical bills. Studies show that 2 million Americans annually.
Middle class families are encouraged to spend. So they spend more than they make. They are wrapped up in materialism. Some families had to downsize to save themselves from bankruptcy. Middle class people need to learn how to save more money by putting it in a bank, spending less, and etc. They should also learn how to budget their money correctly and save up for difficult times.
http://www.consumeraffairs.com/news04/2005/bankruptcy_study.html
http://www.usatoday.com/money/perfi/general/2009-11-19-bankruptcy19_CV_N.htm
http://www.mpbn.net/News/MaineNews/tabid/181/ctl/ViewItem/mid/3475/ItemId/9845/Default.aspx
http://www.consumeraffairs.com/news04/2005/bankruptcy_study.html
Middle-Class Americans on the Brink of Bankruptcy
By Andrew Lipsitz
With the onset of the economic breakdown in 2008, it appears that more and more middle-class Americans are filing for bankruptcy now more than ever before. There once was a time when a college education and home ownership meant that a family was financially secure of debt problems, however this ceases to be the case in these times.
A study conducted by Harvard Law School’s Elizabeth Warren suggests that these two main assets have become more risky since the financial stresses that have been plaguing the economy. Higher education may be a great investment for learning, but with such high student loan rates, and a declining job market, many middle-class Americans are finding it hard to repay the massive debt that they owe to these agencies. It has become an increasingly competitive market out there, forcing many to file for personal bankruptcy.
Homeownership, much like a college education, is proving to be less and less valuable to these middle-income families. Since the 80’s, many middle-class families relied on their houses, with fixed-rate mortgages and appreciating values, as an economic safety net should something go wrong. However, today’s home value market is plummeting and leaving many of these families with no cuss ion. Some are stuck with mortgage payments that they can’t even afford, but cannot sell their house for below the price they paid.
Investor Protection under Corporate Bankruptcy
When a public company files for bankruptcy, there are many mechanisms put in place by the government that protect the interest of the company’s investors. It is first important to understand the different levels of investor protection. Depending on the type of creditor, there are stipulations that decide whom has the right to make a claim on the remaining company assets.
Secured creditors are obviously the first interest of the company asset distribution. Typically, the secured creditors of a public company are banks. Regardless of the institution of the secured creditors, they are always paid first. Unsecured creditors on the other hand are the second claim on company assets. Unsecured creditors are typically banks, suppliers, and bondholders. The third level of claims comes from the company stockholders. The stockholders have ownership in the company and are only repaid if both the secured and unsecured creditors have been fully repaid. Thus, this is the riskiest level of company investment because there is no actual guarantee on your investment.
Companies that file for Chapter 11 bankruptcy are interested in restructuring the structure of the existing business. The overall goal in Chapter 11 is to find a restructuring plan that makes the company profitable in the future. Once a company files the bankruptcy plan, all major business decisions are decided upon by the bankruptcy court in place. However, marginal day-to-day decisions are still in the hands of the existing company management.
Chapter 7 bankruptcy on the other hand is when a company decides to completely end all operations, thus going out of business. In the event of a chapter 7 filing, an assigned trustee is put in place to sell all company assets and pay off company creditors.
CIT Group: Bankruptcy Plan has Wide Support
Posted by Matthew MailletThe New York-based company said it was won "substantially in excess" of the minimum support needed under U.S. bankruptcy law to restructure from all classes of bondholders eligible to vote on its "prepackaged" Chapter 11 plan.
CIT on Nov. 1 filed one of the five largest bankruptcies in U.S. history, hoping to reduce debt by $10 billion.
Hundreds of thousands of small- and mid-sized businesses depend on CIT for financing, and company lawyers have said CIT has a "need for speed" in getting through bankruptcy on concern that many customers could defect if the process drags on.
Click here to read more...
Wednesday, November 18, 2009
P&C Parent Company Files for Bankruptcy
Posted by Chris O'Sullivan
The parent company of many student's favorite local supermarket has filed for bankruptcy. Syracuse based Penn Traffic Co., parent company to P&C, recently filed for bankruptcy for the third time in ten years. This seems to be the last straw for Penn Traffic, as they will now sell all of there asset consisting primarily of 79 stores located in the region.
Stores will continue operations under court protection while a potential buyer is sought out. “We intend to continue to work closely with our vendor partners to provide the fresh products and good value that our customers have come to expect from our stores,” said Gregory J. Young, Penn Traffic’s president and chief executive officer. Company employees will continue to be paid wages as well as benefits.
This is a sad day for CNY business, as it appears the company be sold to a buyer outside of the region. Penn Traffic has filed chapter 11 and plans to sell all or most of its assets. Many believe a buyer agreement has already been finalized due to the fact that a Jan.10th sale date has already been announced.
Penn Traffic flourished in the 90's, acquiring other grocery chains and maxing out at over 200 total stores. This number has diminished significantly over the past decade amidst three bankruptcy filings. Business in the CNY region has most certainly been affected by supermarket powerhouse Wegman's, which often receives rave reviews from consumers in the area. Locals have noticed higher prices at P&C in recent months, and it appears their troubles have finally caight up with them.
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AIG gets a pass
By: Zachary Pienkowski
While we all have heard about the troubles that AIG has been facing over the last year, one thing that is nice talked about quite as much is what happened to those they insured? While it was all over the media how federal regulators worked around the clock in an attempt to bailout AIG, they did not properly work out agreements with their business partners to negotiate the value of their assets. The result was over $62 million of taxpayer and AIG money being distributed to 16 banks which were business partners with AIG. Generally when a toxic asset is being liquidated the value of the asset drops considerably and is usually acquired for pennies on the dollar. This wasn't the case with many of AIG's counter-parties. The exact opposite occurred, in fact, they paid 100 cents on the dollar for nearly all of the underlying assets. Complaints have been pouring in that the Fed gave up too easy and did not exercise their leverage to make AIG's business partners to fall in line like many of the other banks that were bailed out did. The Fed rushed to bail out AIG but then lost all of its leverage because they had nothing to threaten them with anymore. Prior to bailout AIG had the fear of going bankrupt, but after the bailout this was no longer the case. The Fed felt pressured to keep making the collateral payments to the other 16 banks that AIG could no longer fund because they did not want to have to force taxpayers to fully fund the 100 cent on the dollar default swap.
Sources:
http://money.cnn.com/2009/10/13/news/companies/aig_bonuses/index.htm?postversion=2009101318
http://money.cnn.com/2009/03/07/news/companies/aig.fortune/index.htm
http://www.forbes.com/2009/03/16/aig-counterparties-bailout-markets-equity-cds.html
Tuesday, November 17, 2009
Personal bankruptcies surge 9%
By Zachary Pienkowski
NEW YORK (CNNMoney.com) -- The number of Americans filing personal bankruptcies surged 9% in October and were on target for the highest annual total in four years, according to a report issued Wednesday.
The American Bankruptcy Institute, an industry research firm that relies on data from the National Bankruptcy Research Center, said 135,914 consumers filed for bankruptcy last month. Almost a third of the bankruptcies were filed under Chapter 13, in which consumers are put on a repayment plan of up to five years.
"The nearly 9% increase in consumer bankruptcy filings in October, together with a 7% jump reported in business cases, demonstrates the sustained stress on the U.S. economy," said ABI executive director Samuel Gerdano.
The group forecasts total bankruptcies to exceed 1.4 million in 2009, which would be the highest since 2005. It would also be an increase of at least 30% from last year.
"People are still carrying a lot of debt in terms of credit cards and home equity loans, and unemployment is still rising," said Maureen Thompson, legislative director for the National Association of Consumer Bankruptcy Attorneys in Washington. "All of those factors are hitting consumers at the exact same time."
To read more on this topic click here
Bankruptcy Rise Slows With Thaw In Lending
The bankruptcy boom is going bust -- for now.
The financial crisis created one of the worst periods in U.S. history for corporate bankruptcies, felling the likes of Circuit City Stores Inc., General Motors Corp. and CIT Group Inc., the giant lender to small businesses.
Now corporate failures have slowed, as companies once on the verge of default have found a new life. These companies are now refinancing their balance sheets with new debt, pushing out maturities on existing loans or using distressed-debt exchanges to avoid a bankruptcy filing.
Speculative-grade companies -- or those with "junk" credit ratings -- have issued about $123 billion in new bonds this year, compared with roughly $48 billion in all of last year, according to data provider Dealogic. That's on pace to challenge 2006's record issuance of more than $143 billion, Barclays Capital analysts said late last week.
Many analysts worry the refinancing wave is just "kicking the can" down the road, without fundamentally fixing companies' deeper problems. Among weaker companies, about $1.4 trillion in bonds and loans will still come due in the next five years, said Dominic DiNapoli of FTI Consulting, a business advisory firm.
At the height of the credit crisis in January, Moody's Investors Service predicted that as much as 16.4% of U.S. junk-rated companies would have defaulted in the past 12 months. Some analysts said the default rate might not peak until early 2010.
Now, Moody's expects that U.S. default rate to peak at 13.6% this month and fall to 4.4% a year from now. Just three large publicly traded companies filed for bankruptcy-court protection in September and six filed in October, down from 16 in March, according to data compiled by Lynn LoPucki, a University of California, Los Angeles, law professor. Mr. LoPucki tracks filings by public companies with assets greater than $261 million.
In normal times, high debt issuance signals economic vigor, as companies use the money to expand. But today, new debt "is nearly 100% refinancing," said Citigroup Inc.'s Richard Banziger at a gathering of the Turnaround Management Association. "From that perspective, it's less healthy."
Despite the lull in corporate failures, there have been signs in recent weeks that bankruptcies could tick upward again. There have been several high-profile filings, including Capmark Financial and CIT. Already, five big companies have filed in November.
It remains unclear "how long the window will stay open" for weaker companies to borrow, said Barclays Capital restructuring chief Mark Shapiro. "Six months ago, no one thought that many of these companies could access the high-yield market." For the time being, he said, it's helping a lot of companies avoid "bankruptcies that would have otherwise occurred in the next year."
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Study Finds Illness, Medical Bills Root Cause of Majority Of U.S. Bankruptcies
Posted By: Robert Katz
By: S. L. Baker
(NaturalNews) Unemployment is high and retirement accounts have virtually disappeared for many folks in the wake of the current recession. Housing prices have plummeted, too. So it comes as no surprise that data just released by the Administrative Office of the U.S. Courts shows the total number of U.S. bankruptcies filed during the first three months of 2009 increased 34.5 percent over the same period in 2008. But what is surprising is a new Harvard study published in the August 2009 issue of The American Journal of Medicine which reveals financial woes starting hitting Americans even before the officially recognized economic downturn -- and the main culprit was illness and medical bills.
The results of the first-ever national random-sample survey of bankruptcy filers, conducted by researchers at Cambridge Hospital and Harvard Medical School, Harvard Law School and Ohio University, show that in 2007, 60% of all bankruptcies in the United States were driven by sickness and related medical bills. Moreover, the share of bankruptcies attributable to medical woes over the past few years has been on the upswing.
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Monday, November 16, 2009
Bankruptcy Issue Slows
Posted by Chris O'Sullivan
Article by Mike Spector (Wall Street Journal)
The bankruptcy boom is going bust -- for now.
The financial crisis created one of the worst periods in U.S. history for corporate bankruptcies, felling the likes of Circuit City Stores Inc., General Motors Corp. and CIT Group Inc., the giant lender to small businesses.
Now corporate failures have slowed, as companies once on the verge of default have found a new life. These companies are now refinancing their balance sheets with new debt, pushing out maturities on existing loans or using distressed-debt exchanges to avoid a bankruptcy filing.
Speculative-grade companies -- or those with "junk" credit ratings -- have issued about $123 billion in new bonds this year, compared with roughly $48 billion in all of last year, according to data provider Dealogic. That's on pace to challenge 2006's record issuance of more than $143 billion, Barclays Capital analysts said late last week.
At the height of the credit crisis in January, Moody's Investors Service predicted that as much as 16.4% of U.S. junk-rated companies would have defaulted in the past 12 months. Some analysts said the default rate might not peak until early 2010.
What Are the Positive Benefits of Bankruptcy?
By Lingxiao Li
While bankruptcy carries a nasty cultural stigma with it, it may be a very positive choice for a number of indebted individuals to help them lighten their financial burden. Let's take a look at what are the possible benefits that bankruptcy can bring. First of all, it allows for the "discharge" of most, if not all of your debts. This means that you are no longer legally obligated to pay the debts. Secondly, it prevents property from being repossessed, or it may require creditors to return property that was repossessed. It stops the collection process. This means that creditors must stop attempting to collect on the debts. It gives you the opportunity to dispute false claims from creditors who may be trying to collect more than what it owed to them. It halts the foreclosure process and gives you time to catch up on payments. This means you will not necessarily lose your house or mobile home. While bankruptcy will allow for the discharge of a number of debts, others remain non-dischargeable according to federal regulation. Non-dischargeable debts include family support, student loans, certain types of taxes, and criminal fines. Liens, mortgages, and other secured debts will also survive bankruptcy procedures seeing as how they are secured by either some sort of collateral or by the federal government. Additionally, it is important to remember that Chapter 7 bankruptcy does not relieve a co-signer from any responsibility that he or she might have. The creditor has the right to enforce the co-signer's obligation. Chapter 13, on the other hand, will protect a co-signer as long as the debtor complies with his or her bankruptcy plan.
http://ezinearticles.com/?What-Are-the-Positive-Benefits-of-Bankruptcy?&id=725436
http://ezinearticles.com/?When-Bankruptcy-is-a-Legitimate-Option&id=3270821
http://www.attorneylocator.us/index.1.jpg
Gay publications close after bankruptcy
By Atlanta, Georgia
Post by Lingxiao Li
"It is with great regret that we must inform you that effective immediately, the operations of Window Media LLC and United Media LLC have closed down." It asked employees to return Wednesday, adding, "Please bring boxes and/or containers that will allow you to collect all your personal belongings at one time."
And with that, Douglas-Brown lost her job at Atlanta, Georgia-based Southern Voice --The South's main newspaper for lesbian, gay, bisexual and transgender communities --where she has worked for more than 12 years.
Southern Voice, which was in print for more than 20 years and had a 100,000 circulation, was one of several gay newspapers and magazines, including the Washington Blade and South Florida Blade, that were shut down Monday when their parent companies, Window Media and United Media, filed for Chapter 7 bankruptcy.
"Certainly we knew finances were tight, but none of us were expecting this today," said Douglas-Brown, who spent her day greeting staffers at the office so they wouldn't find the note alone.
Calls to corporate offices of the parent companies were not immediately returned Monday. Read more.
Simmons files for Chapter 11
By Aaron Smith
Atlanta-based Simmons filed for Chapter 11 under a restructuring plan in Delaware Bankruptcy Court. If the bankruptcy filing is approved, then the process should take about 60 days, according to Michael Henson, spokesman for Simmons through an outside firm.
"All that's left is confirmation of the court," he said. "If the court approves the restructuring plan, the company should be able to close the transaction shortly hereafter."
NEW YORK (CNNMoney.com) -- Simmons Bedding Co., the second-largest mattress maker in the U.S., filed for bankruptcy on Monday.
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Tuesday, November 10, 2009
Recession triggers Bankruptcy Increase
Article By: Srividya Srinivasan
The years from 2006 to 2008, were the worst of times with bankruptcy declarations and, apparently, it still is. The United States Courts confirmed that 1,306,315 bankruptcy filings during the year ending June 30, 2009, represented a 35 percent increase compared to the 967,831 cases filed during the same period last year”1. All chapters of bankruptcy saw this filing increase during this time period. Because of the recession, bankruptcy filings have steadily increased.
Sometimes bankruptcy is the only way out. People declare bankruptcy or enter into a consumer proposal, which is the term to pay creditors a fraction of their debt. Experts say the deep recession could ripple through bankruptcy numbers for several years.
There are many misconceptions about bankruptcies. People think everything is cleared out in a bankruptcy. People don’t get away with a clean slate. “Bankruptcy is meant to be rehabilitative, not punitive. ‘For many, this is a break they never thought possible,’ said Henry Vine, a trustee with Vine and Williams in Hamilton” 2. Some people think bankruptcy is an excuse for people that don’t want to pay; it is really about hardship. Steve Borsellino, also a trustee with Vine and Williams, says that most people learn their lesson the first time, but about 10 percent find themselves bankrupt again. "That's much higher than we'd like to see ... but most people appreciate the second chance. They see it as an opportunity to start over," Borsellino said.
Consumer debt is bearing most, but not all, of the blame for the largest climb in bankruptcy filings Western New York has seen in at least seven years3. Business filings peaked in 1987 and have declined by about 37 percent since that time. According to the American Bankruptcy Institute in Alexandria, Virginia, nearly 95 percent of bankruptcy cases filed last year were consumer cases.
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Wilkes Bashford files for bankruptcy protection
Article By: Henry K. Lee, Chronicle Staff Writer
Posted By: Srividya Srinivasan
The Wilkes Bashford Co., the namesake business of the Sutter Street clothier that has been has been struggling since the economic meltdown, has filed for Chapter 11 bankruptcy protection, court records show.
The filing Monday came a little more than a month after the upscale company abruptly closed its satellite stores in Mill Valley and Carmel. In February, Wilkes Bashford laid off 18 of 97 employees because of slumping sales.
The company filed for Chapter 11 protection to ease the sale of its assets to Ed Mitchell West LLC, which is affiliated with a private luxury retailer on the East Coast. Under the proposed agreement, Mitchell would continue to operate Bashford's San Francisco and Palo Alto stores and pay $4.6 million in cash, pending better offers through a competitive bid process.
Bashford wants the sale to close by Nov. 30 to avoid affecting the holiday shopping season. A hearing on the matter is scheduled for today.
Sunday, November 8, 2009
Advanta files for bankruptcy protection
Posted By Rico K Setyo
By Megan Davies
Advanta Corp (ADVNA.O), a small business credit card lender, on Sunday said it filed for bankruptcy protection after the economic crisis over the last two years devastated its small business customers.
Advanta Bank Corp, a wholly owned subsidiary of Advanta Corp which issues credit cards for small businesses, is not included in the Chapter 11 filing, the company said. The filing will not have any impact on outstanding credit card balances, Advanta said.
The Spring House, Pennsylvania-based company Advanta, which earlier this year shut 1 million accounts, said it is currently collecting its $2.7 billion portfolio of managed receivables from 360,000 customers, but the cards are not open to new charges.
It cautioned that Advanta Bank's capital is below regulatory capital requirements and over time Advanta Bank Corp may be turned over to an FDIC receivership.
It said the parent corporation has decided not to fund the capital deficiency in order to preserve value for the senior retail note holders and other Advanta Corp. stakeholders.
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Personal Bankruptcy on the Rise
By Rico K. Setyo
Since 2007, the financial crisis has taken a toll on both individuals and businesses. For the past two years, many businesses and corporations have fallen and filed for bankruptcy. However, corporations in the financial and commercial industry are not the only victims of bankruptcy, many consumers have fallen to bankruptcy filings.
The amount of American consumers filing personal bankruptcies has reached 9% which is considered the highest in four years. In addition the amount of total bankruptcies exceeded 1.4 million. Many people are still holding a lot of debt like credit cards and home equity loans. Since unemployment continues to rise, these people who have a lot of liabilities are not able to pay their creditors which ultimately lead to bankruptcy. However, many people have found alternatives to pay their debts by tapping into their retirement funds and savings.
The government is trying to help these people by passing an unemployment extension bill which was recently passed by the senate. This bill will help Americans by giving them an additional 20 weeks of unemployment benefits. Since unemployment is closely connected with bankruptcy, passing this bill will hopefully help some people with their financial struggles.
Another way to reduce the amount of people filing for personal bankruptcy is taking alternatives to relieve debt. Some of these alternatives are debt settlement, debt consolidation & debt consolidation loans, and consumer credit counseling.
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Effectiveness of Government Bailouts
Written By: Lisa Matthys
It was hardly a surprise that CIT filed for Chapter 11 bankruptcy protection on November 1st as it has been expected for months. However, mainstream media is calling the collapse “one of the largest in U.S. corporate history”, fifth after Lehman Brothers, Washington Mutual, WorldCom, and General Motors.
The 101-year-old CIT received a $2.3 billion bailout from the federal government last December. The bankruptcy of CIT marks the first failure of a government-bailed-out firm. Last year during the peak of the financial crisis, government bailouts were expected to help those banking companies near the verge of filing for bankruptcy. Out of those companies given government money, companies like Goldman Sachs Group Inc. and JPMorgan Chase & Co. have already repaid their debt and restrictions have been lifted. But companies such as Citigroup Inc. and Bank of America Corp will continue to have restrictions, on bonuses for example, until they pay back the government.
But when will enough be enough? The Obama Administration is currently contemplating whether to provide a third rescue to GMAC, which provides financing for dealers, primarily General Motors and Chrysler. GMAC is seeking as much as $5.6 billion in taxpayer money, on top of the $12.5 billion it received previously. Many say that GMAC’s failure would be devastating not only to General Motors and Chrysler, but also to consumers who often use GMAC to finance loans to buy new vehicles.
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As Bankruptcies Surge, Fewer Emerge
Posted by Adam Lindheim
By John Tozzi
As the effects of the recession continue, the high number of business bankruptcies—7,514 in May, up 40% from the prior year—shows few signs of abating. That's because the factors pushing companies into bankruptcy, including depressed sales and tighter credit, may linger even when the economy starts growing again, especially if the recovery is less than robust.
More than 100,000 companies—about one in every 270 American businesses—have landed in bankruptcy court since the downturn began 18 months ago, according to data compiled by Oklahoma City-based Jupiter eSources, which tracks bankruptcy filings through its AACER database. The rate of commercial bankruptcies has more than doubled in two years, and economists expect the level to remain high for a year or longer once the recession ends. In addition, creditors are less willing to work with business owners to find ways for an insolvent firm to recover.
That's because in a sluggish recovery, banks with already fragile balance sheets are unlikely to be sympathetic to debtors' turnaround plans. Often creditors recover more of their debts faster by closing bankrupt businesses and selling off the assets. "Today lenders—meaning banks—have much less patience for a traditional Chapter 11 reorganization, no matter what size the case," says attorney Kenneth Rosen, head of the bankruptcy group at Lowenstein Sandler in Roseland, N.J.
Bankruptcy Buyout Basics
By Adam Lindheim
With more and more businesses filling for bankruptcy, bankruptcy buyouts are becoming more common, but can be problematic compared to traditional acquisitions. Most modern bankruptcy buyouts are considered 363 deals. 363 refers to a section of the bankruptcy codes, and are designed to maximize value of each of the businesses assets. These deals are not intended to follow the same procedures as chapter 7 or chapter 13, as well speeds up the processes.
If a businesses entrepreneur is aware of a business potentially filling for bankruptcy, they can work out a deal to make the buyout easier before the company files for bankruptcy. The company or individual purchasing the company can build in protections in order to insure the success of buyout. Once the seller files for bankruptcy, they can ask the judge to approve the deal and then authorize the auction of the company. The seller must still give the auction to the highest bidder, but the 363 deal insures a quick and speedy deal is done. Despite these facts Moody's Investors Service did a study that followed the largest private equity deals of the decades buyouts. They found that these deals fared much worse than in past decades. It is important to carefully study the companies that are filing for bankruptcy before an acquisition deal is finished.
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Hollywood Financial Woes: Willie Aames Rebounds, Nicholas Cage Sues
Posted By: Lisa Matthys
Written By: Alice Gomstyn and Sheila Marikar
Celebrity financial problems are making headlines again this week, with Nicolas Cage pursuing a lawsuit, and Willie Aames trying to make a comeback.
A documentary chronicling Aames' efforts to rebuild his life will premiere Thursday on VH1. The documentary is called "Broke and Famous: Willie Aames," and it will show the star of "Eight Is Enough" and "Charles in Charge," who has struggled with a home foreclosure and bankruptcy, working with a financial guru and life coach. He is trying "to reshape his financial future," VH1 said in a statement.
Evidently, Aames has already succeeded -- he told the show "Entertainment Tonight" that he, himself, now plans to become a financial advisor.
Click here to read more!
GM and Opel
The executive, Carl-Peter Forster, was expected to run Opel after a majority stake was transferred to the Canadian auto parts supplier Magna International and the Russian bank Sberbank.
Mr. Forster had been outspoken in his support of the sale and this week criticized G.M.’s handling of the deal, the result of talks that started in the spring as the company spiraled toward its June 1 bankruptcy filing. The aborted deal also included G.M.’s British brand, Vauxhall.
Robert A. Lutz, G.M.’s marketing chief and a member of Opel’s supervisory board, will become Opel’s interim chairman while G.M. searches for a new chief executive, a person with direct knowledge of those plans said. Mr. Lutz, 77, who delayed previous plans to retire this year, will retain his current duties.
Mr. Forster, an opponent of the board's decision to keep Opel, will be replaced for now by GM marketing chief Robert A. Lutz, who will be head of the Opel supervisory board but not GM Europe CEO.
Thousands of Opel employees walked off the job on Thursday to protest the decision.
“Our trust (in GM) is now zero, and that is the heart of the problem,” the Associated Press quoted Klaus Franz, the head of Opel’s employee council, telling thousands of workers in Ruesselsheim.
Lear to Exit Bankruptcy Court
The Southfield, Mich., company, which produces seats and electronics for automobiles, expects to emerge from bankruptcy court on Monday, just four months after it filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Despite concerns voiced earlier in the year suggesting there would be no bankruptcy financing available for auto suppliers, Mr. Rossiter managed to line up creditors and lenders willing to fund a $500 million debtor-in-possession facility and exchange billions in debt for new equity.
Lear and many of the other key players in the U.S. supply industry avoided the dire prospects predicted for the auto-supply chain earlier this year. At least 50 auto suppliers have filed for bankruptcy protection in 2009, but many of them have managed to quickly regain footing and avoid liquidation even though the U.S. auto-supply chain is operating at about 46% of its actual production capacity, according to the Original Equipment Suppliers Association.
"There has been significant progress in recent months to recognize and protect the [suppliers] that will continue to provide the foundation beneath any [auto maker] looking forward to surviving this crisis," CSM world-wide supply-chain analyst John Eaton said in a recent research report. Billions in aid from the U.S. Treasury Department, and an unexpected, albeit limited, source of DIP financing has helped salvage many of the larger parts makers.
On Monday, Lear is expected to post a $100 million operating profit and $100 million in positive free cash flow for the third quarter, as well as announce that its new business backlog for the next three years has swelled to $1.4 billion, or 25% higher than it was in January, according to a spokesman.
For Mr. Rossiter, who has been at Lear's helm since 2003, the challenge has never been about proving that his company has a strong core. His challenge has been posting sustained earnings growth while relying heavily on U.S. auto makers that often oblige suppliers to take price reductions, shoulder material cost increases, and incur mountains of debt in order to win supply contracts.
It was a pile of debt, much of which was related to a business it hasn't owned since mid-decade, that landed Lear in bankruptcy court.
The auto supplier divested its interiors business—which relied on the extremely low-margin production of injection-molded plastic parts—to billionaire investor Wilbur Ross.
As a part of that deal, Lear agreed to keep about $2 billion of that business's debt. "We were carrying this $2 billion in debt that we had no sales on," Mr. Rossiter said in an interview Friday.
By last November, after the meltdown of the credit markets and a nosedive in U.S. auto sales, Mr. Rossiter said it was clear that the company would have to do something about its debt load.
Rather than wait for government funding or request significant bailouts from its customers, Mr. Rossiter tried his luck with bankruptcy and creditors, making it clear that "we are more realistic about our approach...we want a fair return for what we give."
Lear expects its stock to resume trading on the New York Stock Exchange upon the company's emergence from bankruptcy court. Mr. Rossiter said the equity, which is mostly owned by the creditors who backed the Chapter 11 filing, is expected to be valued at $1.9 billion, a level not seen since mid-2008. "We think we fixed the business and we're going to come out with investment-grade metrics," Mr. Rossiter said.
Under Mr. Rossiter, Lear increasingly has moved operations to lower-cost markets and won business in markets outside the U.S., including Asia and Europe. Its most recent achievement was scoring the seating business for the Fiat 500 compact car that Fiat SpA plans to make in Mexico and sell in the U.S.
But despite deep retooling, Lear has made one annual profit in the past four fiscal years. Standard & Poor's Ratings Services, in a news release issued late Friday about its expectations for Lear's credit ratings, estimated that 37% of Lear's 2008 sales are based on deliveries to General Motors Co. and Ford Motor Co. A quarter of its seat sales are to GM. S&P expects to assign a "B" credit rating to Lear's corporate credit and view it with a "stable outlook."
Analysts expect Lear's court-protected debt restructuring, which will lower interest payments, to help drive profits. Lear also reworked supply and labor contracts in bankruptcy court in order to cut costs and fortify pricing. "Based on the capital structure under the plan of reorganization, the new company will have reduced its debt by more than 75% from pre-bankruptcy levels," S&P credit analyst Lawrence Orlowski wrote in the release.
"We assume Lear's global sales for 2010 will grow 12%," Mr. Orlowski added. Still, the supplier is likely to face major challenges. "We believe the new Lear's business risk profile after emergence will be weak, largely because of volatile auto production levels, high fixed costs, fierce competition, and severe pricing pressures that characterize the global auto supplier industry," Mr. Orlowski said.
Namvar Debts At New Heights
Posted by Stefanie Marty
That amount, combined with $545 million already known to be owed by his bankrupt real estate investment company, Namco Capital Group Inc., swells the total amount of money owed in Namvar’s financial collapse to at least $866 million.
The information on what Namvar owes comes from a list of the businessman’s personal debts that was prepared by his bankruptcy counsel but has not been filed in court. The list can be found on the Namvar bankruptcy trustee’s Web site.
Bankruptcy experts and local attorneys said they know of no larger personal bankruptcy in Los Angeles County in recent decades, although no one knew of any records that would verify that. However, local corporate bankruptcies, such as Fremont General Corp. and IndyMac Bancorp Inc., were far larger.
“This is as big a local real estate bankruptcy case as I recall,” said J. Scott Bovitz, a bankruptcy law expert with three decades of experience who is also representing a Namco creditor. “I think at the end of the day we are going to discover the amounts are higher – I think it could be a billion-dollar case.”
Namvar is the subject of a federal investigation and has been accused by several creditors of running a Ponzi scheme after his real estate business collapsed.
Namvar raised money in an unusual way. He personally collected it from hundreds of members of his own West L.A. Persian Jewish community, some of whom are now said to be destitute after handing him their life savings. He invested most of it in commercial real estate, including such local trophy assets as the Los Angeles Marriott Downtown hotel; the Wilshire Bundy Plaza office building in West Los Angeles; and the Park Fifth development site downtown, where he and his partners planned to build the tallest condo tower west of Chicago.
His empire, valued at $2.4 billion in mid-2008, collapsed in the real estate downturn in the second half of last year. He and his company were forced into bankruptcy by a group of creditors in December.
Filing Personal Bankruptcy or Opt for a Debt Relief Program?
Written by Stefanie Marty
Bankruptcy filings are at near historical highs. Consumers feel that they are benefiting through filing personal bankruptcy. But totaldebtrelief.net advises to avoid personal bankruptcy due to different reasons. By filing bankruptcy it doesn’t mean that personal property cannot be seized anymore. Further bankruptcy has a long-term effect on the filers by destroying their credit records. It is almost impossible for filers to get any form of credit during a long period of time, it will be more difficult for them to get a job and it also leads more likely to higher deposits paid by them for utilities.
But certainly there are cases when filing bankruptcy makes sense. When to file for bankruptcy is different for everyone. John Turner, an attorney specializing in bankruptcies, says that in general people might need to start thinking about filing when they pay everyday expenses with their credit card.
Instead of filing personal bankruptcy totaldebtrelief.net advises individuals to consider alternatives like debt relief programs. One such alternative is a debt settlement which helps eliminating credit card debt. But also in such a process every step has to be evaluated carefully. As Susan Grant, director of consumer protection at the Consumer Federation of America, said: “There's no guarantee that a debt-settlement company is going to be able to in fact settle your debts for pennies on the dollar, if at all.” To make sure a debt settlement is the right thing to do in your situation, visit a consumer-credit counseling agency, talk to attorney, and try working out a settlement yourself. Working out a settlement helps you to find out what you can afford to pay and come to an agreement with your creditors.
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Saturday, November 7, 2009
One of the oldest symphony houses declares bankruptcy
Written by Michael Rivezzo
The Honolulu Symphony, one of the oldest symphony houses still left, has decided to file for Chapter 11 bankruptcy protection. Last week the symphony stated that it did't have the money to supplement their payroll. The house decided it will cancel the rest of their shows for this year, they do not want to spend money they don't have said Majken Mechling, the executive director of the symphony society. They stated that ticket sales were the same as usual but donations, which covers 70 percent of costs, were down exponentially.
The symphony had trouble signs over the past years of the upcoming bankruptcy. Last year they held checks for sometimes up to three months. Musicians, conductors and staff tried to help carry the load by accepting a 15-20 percent payroll cut for this year. They just did not have the money to support a 64-piece orchestra. They go into bankruptcy with a 1 million dollars in debt. They have plan to re-organize themselves and possibly cut the orchestra's size to be easier to sustain a future growth.
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Personal bankruptcies surge 9%
By Hibah Yousuf
Posted by Michael Rivezzo
The number of Americans filing personal bankruptcies surged 9% in October and were on target for the highest annual total in four years, according to a report issued Wednesday.
The American Bankruptcy Institute, an industry research firm that relies on data from the National Bankruptcy Research Center, said 135,914 consumers filed for bankruptcy last month. Almost a third of the bankruptcies were filed under Chapter 13, in which consumers are put on a repayment plan of up to five years.
"The nearly 9% increase in consumer bankruptcy filings in October, together with a 7% jump reported in business cases, demonstrates the sustained stress on the U.S. economy," said ABI executive director Samuel Gerdano.
The group forecasts total bankruptcies to exceed 1.4 million in 2009, which would be the highest since 2005. It would also be an increase of at least 30% from last year.
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Tuesday, November 3, 2009
Small Business Bankruptcy Filings Up 44% from Last Year
Written by: Lisa Matthys
An analysis performed by Equifax Inc. shows that bankruptcies among small businesses have increased by 44% from the third quarter of 2008 to the third quarter of 2009. In September 2009, there were 9361 bankruptcy filings throughout the U.S., up from 7386 one year ago. California remains the state with the most commercial bankruptcy filings during September 2009. Other states with high small business bankruptcies include Colorado, Texas, Oregon, and Georgia. Based on the data, the East Coast (areas such as Charlotte and New York – White Plains) are experiencing an earlier recovery from the recession than the West Coast.
Because of such high bankruptcy statistics over the last year and the recent declaration of bankruptcy of major Small Business Administration-backed loans, CIT, small businesses are struggling to find loans because banks are raising lending requirements and reducing the amount of credit they are willing to extend to reduce their exposure to risk. However, all hope is not lost. There are still sources for financing but borrowers must be prepared to disclose their current financial standing, along with the past two years of financial performance. With the current economy, small business bankruptcies are expected to continue to rise, leading to higher unemployment within the United States.
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October Personal Bankruptcies Highest Since 2005 Law Changes
Posted by: Lisa Matthys
Written by: Bill Rochelle and Michael Bathon
Nov. 3 (Bloomberg) -- More Americans filed bankruptcy in October than in any month since changes to U.S. bankruptcy laws in 2005 as unemployment and falling home prices prevented consumers from paying their debts.
The number of individuals filing bankruptcy rose 25 percent to about 131,200 from a year earlier, according to data compiled from court records by Oklahoma City-based Jupiter ESources LLC. The 1.2 million bankruptcies filed through October have already surpassed last year’s total of 1.1 million.
Businesses also continued to struggle to pay creditors; corporate bankruptcies climbed about 30 percent from October 2008, according to Jupiter. Chapter 11 bankruptcies, where a company attempts to reorganize rather than liquidate, rose the most in four months to 1,327 in October, according to Jupiter.
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Business Bankruptcy Filings Increased 7% in October
By Eric Morath
Posted By: Srividya Srinivasan
Business bankruptcy filings jumped in October, reversing two consecutive months of declining commercial filings and indicating that bankruptcies could continue to rise as the economy struggles to stabilize.
Last month, 7,771 businesses filed for bankruptcy protection, compared to 7,271 that sought shelter from creditors in September, according to data from Automated Access to Court Electronic Records, a private firm that tracks bankruptcy filings.
After two months of decline, the 7% rise in commercial filings shows that businesses are still struggling to access financing and are facing weak demand for their products.
"The margin for success is so thin that any financial hiccup" could cause a business to file for bankruptcy, said Jack Williams, a bankruptcy professor at the Georgia State University College of Law.
Click to Read More.
The Truth about Bankruptcy
Posted by: Srividya Srinivasan
Filing bankruptcy represents starting over to some people. Why not start with a clean slate? Because it destroys your financial life let alone your personal life. Bankruptcy should not be a word that is taken lightly. The benefits of bankruptcy are your debt-to-income ratio is reduced, no more harassing calls from creditors, and you can start building up credit immediately after filing. However, the so-called benefits come at a great cost. Filing total bankruptcy affects your credit report and is kept on record for 10 years. Even after this time frame, a bankruptcy past can follow you for the rest of your life. When applying for a loan, it is common to question about past bankruptcy filings. If saying no because it is beyond 10 years, it is still considered fraud.
Most bankruptcy cases can be avoided, and if it is possible, it should be. With help from financial counselors and extensive amputation of excess stuff, eliminates the painful process of bankruptcy. With the help of creditors, debit collectors, and family and friends, as well as selling assets, the option of filing for bankruptcy might no longer have to be an option. As said in an article DaveRamsey.com about the experience of bankruptcy, foreclosure, and lawsuits, “Been there, done that, got the t-shirt, and it is not worth it”.
Monday, November 2, 2009
CIT bankruptcy hits Asian markets
Combined with the CIT Group insolvency that served as a reminder that the US economy and financial system remain under considerable pressure, analysts said.
‘‘CIT filing for Chapter 11 bankruptcy protection is the culmination of difficulties for the lender that investors would have been well aware of. Still, it will at least refocus attention on underlying economic challenges and underpin risk unwinding trades,’’ Patrick Bennett, a strategist at Société Générale in Hong Kong, said in a note.
CIT Australia Bondholders Agree to Waive Rights, Letter Shows
Written by Sarah McDonald
Posted by Minjune Kim
Nov. 3 (Bloomberg) -- Bondholders of CIT Group Inc.’s Australian unit agreed to allow the lender to keep operating as normal after the U.S. parent filed for bankruptcy, according to a company letter to clients seen by Bloomberg News.
CIT Australia negotiated “certain concessions” for investors in its medium-term notes in return for them “forbearing from exercising rights associated with the bankruptcy,” it said in a letter dated yesterday and signed by Managing Director Keith Rodwell.
The letter didn’t give details on the concessions and Rodwell declined to comment when contacted at his office.
CIT, based in New York, listed $71 billion in assets and $64.9 billion in liabilities in a Chapter 11 petition to the U.S. Bankruptcy Court in Manhattan on Nov. 1. The lender, which funds about 1 million businesses such as Dunkin’ Brands Inc. and Eddie Bauer Holdings Inc., said it plans to exit court protection quickly because of support from bondholders, who voted for a “prepackaged” plan.
CIT Group (Australia) Ltd. sold A$300 million ($271 million) of fixed- and floating-rate notes in 2006, according to data compiled by Bloomberg. The bonds were guaranteed by CIT Group, National Australia Bank Ltd. analysts said in a research note yesterday.
The guarantor’s bankruptcy is likely to trigger an event of default, which gives bondholders the right to demand early repayment. The bonds mature in March 2011, Bloomberg data show.
None of CIT’s operating subsidiaries is included in the U.S. bankruptcy filing, according to a group statement.
“CIT Australia is well capitalized, profitable and cash- flow positive,” and the parent group’s bankruptcy filing will have “limited effect” on its daily business, the letter said.
CIT Group Files Chapter 11; Biggest Loss For TARP Plan
By: Albert Tirado
Despite receiving $2.3 billion in federal bailout funds, small-business lender CIT Group Inc. filed for Chapter 11 bankruptcy Sunday afternoon.
CIT is the first firm to fail after receiving government bailout money. The bankruptcy is the largest loss so far for the Trouble Asset Relief Program and ranks among the top five largest bankruptcies in U.S. history.
The 101-year-old company's prepackaged bankruptcy plan is expected to allow the company to leave court protection by the end of the year under the control of its debt holders. While shareholders could receive new notes worth 70 percent of their existing shares, the Treasury Department probably will not see any of its bailout funds repaid
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Sunday, November 1, 2009
The 10 towns with the highest rates of personal bankruptcy
Written by David Budworth
Posted by Stefanie Marty
Bankruptcy and recessions go together like fat cats and bankers - but a report out this week reveals that in some parts of the country this is more true than others.
People in coastal towns are particularly prone to declare themselves bust, according to research from Wilkins Kennedy, the accountant
Overall, the average rate of personal insolvencies in coastal towns was almost one third higher last year than the national average at 20.6 per 10,000 adults, compared with 15.7 across the country and 9.1 in London.
Click here to read more.Increase in Personal Bankruptcy
Written by Stefanie Marty
Personal bankruptcy filings in the United States have risen dramatically in 2009. Here are some numbers: In September alone 130,000 families filed for bankruptcy and so far this year more than one million people have done so. This is a huge increase from 2008 when the total number of bankruptcy filings was 1.1 million. And compared to the first nine month in 2008, there has been a 40% increase in the same timeframe of 2009.
A report of Equifax showed that together with this rise of bankruptcy filings, mortgage delinquencies raised as well, while credit card debt and lines of credit are being reduced. Dann Adams, president of Equifax’s U.S. Consumer Information, explains this result with the current economy in transition. He said that many consumers are still struggling with the high unemployment and the restricted credits, but have improved their cash management.
Other reasons for the high increase in personal bankruptcy filings are the high debt-level people carry, the medical problems people face and the way the real estate market has developed. The debt US citizens hold relative to their income is too big for that they would be able to pay the debt back in case of a job loss. Today, the debt to income ratio of Americans is bigger than 130%. Further many people face high medical costs which make them take on high levels of debt. A statistic says that between 30% and 50% of bankruptcy cases involve medical debt. Lastly, the assets people held – especially the real estate- have lost their value over the last year, what makes people owe even more.
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SemGroup gets the approval.
By Rico Setyo
SemGroup is a energy marketing company that collapsed last year due to the Chief Executive Thomas Kivisto poor decisions of selling unauthorized crude oil options. Upon the collapse, the company filed a Chapter 11 Restructuring to help strengthen the company and prevent it from disappearing from the market. However, according to the court’s records they had estimated obligations of about $9.47 billion to their creditors. In order to reorganize the liabilities and equity side of the balance sheet, they needed to formulate a plan that has to be approved by the courts.
During the Chapter 11 restructuring process, the business continues to operate while the courts oversee its operations. The restructuring ensures that all of the companies secured and administrative creditors are paid back first before any of its shareholders. However, in the actual process there issues that arise with their creditors which jeopardized their chances of court approvals. “The settlements [of the dispute] with the three oil-trading companies are critical, [as stated by] Margot Schonholtz, an attorney for the lenders’ agent, Bank of America Corp.” She also mentioned that without the release of the $122 million, the reorganization plan fails.
Fortunately, SemGroup received court approval on October 26 in a 10 hour hearing for a settlement regarding $122 million that is critical to ending its contentious 15-month bankruptcy. Chapter 11 bankruptcy has been a quite popular option during these rough economic times. Despite the slow recovery many companies are being forced to file for chapter 11 in hopes of saving their organization.
Sources
http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html
http://www.bloomberg.com/apps/news?pid=20601103&sid=arn5X5M6Y2wE
http://www.reuters.com/article/bankruptcyNews/idUSN2516732420091026
CIT Nears Bankruptcy Filing
Post By Rico K Setyo
By Mike Spector and Kate Haywood
CIT Group Inc. plans to file for bankruptcy as soon as Sunday afternoon, said people familiar with the matter, in a high-stakes restructuring intended to keep the doors open at one of the U.S.'s largest small-business lenders.
CIT's board was meeting about the likely filing early Sunday afternoon, these people said, and the company expected to seek Chapter 11 protection in New York in a matter of hours. The lender expected to have considerable support from creditors for its "prepackaged" reorganization, which could allow CIT to have its plan approved quickly and emerge from bankruptcy by the end of the year, other people familiar with the matter said.
The filing comes after a previous debt-exchange offer made to CIT's bondholders failed. But CIT garnered broad support for a prepackaged bankruptcy, people familiar with the matter said.
The $2.3 billion in taxpayer money spent to save CIT is likely to be wiped out, as the lender prepares for the filing.
In a move smoothing its restructuring, the company said Friday that it had persuaded billionaire investor Carl Icahn to support its prepackaged bankruptcy plan. Mr. Icahn, who wanted to push CIT into liquidation, failed to persuade other bondholders to derail CIT's restructuring plan.
With $71 billion in assets, CIT would have the fifth-largest bankruptcy filing in U.S. history, trailing only those of Lehman Brothers Holdings Inc., Washington Mutual Inc., Worldcom Inc. and General Motors Corp. CIT's Utah bank, which has about $10 billion in assets, wouldn't be part of the bankruptcy filing.
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Saturday, October 31, 2009
Delphi's bankruptcy a issue with retirees pensions
Written by Michael Rivezzo
Retirees from Delphi testified in front of a Senate committee this week about abrupt cuts that were made to their pensions following Delphi filing for Chapter 11 bankruptcy in October 2005. Majority of the 20,000 retirees from Delphi stand to lose 30 to 70 percent of their pension. Senators were outraged because GM retirees managed to work out agreements to retain 100% of their pensions during GM's government-led bankruptcy; and GM is the parent company of Delphi.
"It's a wonderful thing that we live in a country where we can petition our government for redress of grievances" said Bruce Gump, a engineer who worked with Delphi for 33 years. The reduction in pensions will most likely put many workers just below federal poverty levels. Gump is pleading with the committee to show fair treatment to all auto workers, with obvious preferential treatment shown to GM workers.
They plan on meeting with the House of Representatives committee in the next few weeks. Hopefully, this situation can be resolved with retirees having a better idea of what they expect to receive in the future.
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Bereaved mother fights for changed bankruptcy laws
BY LARRY MARGASAK
Posted by Michael Rivezzo
A Rhode Island woman urged senators Tuesday to ease bankruptcy rules for people devastated by medical debt, as she described the pain of losing a child and going broke from his health care bills.
The experience of Kerry Burns, of Coventry, R.I., raised a crucial question of bankruptcy law: should people going broke due to high medical bills get a break over those bankrupted by divorce or high credit card bills?
Sen. Sheldon Whitehouse, D-R.I., chaired the Senate Judiciary subcommittee hearing on his bill to create an exception for people whose medical bills are their main cause of financial distress.
Sen. Jeff Sessions, R-Ala., disagreed with a major provision of the bill: Elimination of an income-related test for medical debtors only. The test currently is required to determine if someone is qualified for a Chapter 7 bankruptcy, which allows the debtor to get a fresh start by wiping out all debts.
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Monday, October 26, 2009
Debt Settlement Company Forced to Pay for Defrauding NYS Customers
Posted By: Lisa Matthys
Written By: David Mittleman
During a time when most people are desperate to pay off those high-interest rate credit card balances, it can be tempting to call up a debt settlement company. They often promise a quick fix: by paying them a fee, they agree to negotiate much lower settlement amounts with your creditors. Indeed, for many people debt settlement seems like the answer to fix all of their financial woes and a way to avoid bankruptcy. However, a recent lawsuit against a debt settlement company in New York state might make you think twice before “signing on the dotted line”, so to speak.
In a ruling on Thursday, the Arizona-based Nationwide Asset Services was ordered to pay $200,000 for defrauding 1,981 customers in New York State. Furthermore, the company was also barred from conducting further business in New York, unless they provide a $500,000 performance bond to protect their customers.
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Replacing Bankruptcy Not Best for "Too-Big-To-Fail" Banks
Posted By: Lisa Matthys
Written By: Stephen Labaton
WASHINGTON — Congress and the Obama administration are about to take up one of the most fundamental issues stemming from the near collapse of the financial system last year — how to deal with institutions that are so big that the government has no choice but to rescue them when they get in trouble.
A senior administration official said on Sunday that after extensive consultations with Treasury Department officials, Representative Barney Frank, the chairman of the House Financial Services Committee, would introduce legislation as early as this week. The measure would make it easier for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution.
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Personal Bankruptcy Filings Soar
Written By: Lisa Matthys
Consumer bankruptcies exceeded one million for the first nine months of this year for an all time high since the system was overhauled in 2005. Using data from the National Bankruptcy Research Center, the American Bankruptcy Institute determined that as of Sept 30. personal bankruptcies totaled 1,046,449, whereas in 2008 there were 773,810 within the same time period. September's filings increased 41% from last year.
The 2005 reform was intended to make it more difficult for Americans to simply relieve their debts by filing for bankruptcy. Many attribute bankruptcies to health care and job loss. Some believe personal bankruptcies are caused by over-consumption in which households underestimate their personal disposable income and end up spending more than what they budget for. The new law imposed by Congress forces more people to file under Chapter 13, in which consumers are put on a repayment plan of up to five years. Any debts not addressed by the repayment plan do not have to be paid. Still, even with the new law, about 71% of consumers who filed for bankruptcy within the first nine months of this year filed for Chapter 7. With a tough economy, the American Bankruptcy Institute expects that personal bankruptcies will exceed 1.4 million by the end of the year.
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Sunday, October 25, 2009
Commercial Real Estate Industry are Seeing Bankruptcy as the Only Option
By Rico Setyo
The commercial real estate industry has already been forecasted to collapse. The Federal Deposit Insurance Corporation closed Corus Bank which can be seen as the beginning of “the next shock to the banking system” which would be commercial real estate. The lack of new debt will hurt many people especially inside the industry. There are three signs to look for to see how badly and when will the collapse of the industry happen: Special Servicers, Big Projects, and Regional Banks.
Capmark Financial Group is one of the largest commercial real estate lenders and they have recently filed for bankruptcy protection due to bad debts. The company has been looking at Chapter 11 Bankruptcy since September and they have finally filed. Chapter 11 bankruptcy is the restructuring of the organization and the debt it owes. Mohsin Meghji, the company's chief restructuring officer said that "the Chapter 11 process will give Capmark the opportunity to restructure our balance sheet while continuing to focus on maximizing value for our principal stakeholders".
Many other players in the commercial real estate industry were forced to make the same the decision as Capmark. The mall giant company, General Growth Properties and hotel chain, Extended Stay Inc. filed for bankruptcy in the past year, and even more commercial real estate ventures could fail because of the inability to refinance debts and reduced customer traffic as consumers continue to pull back.
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Annie Leibovitz is heading towards bankruptcy.
By Johanna Neuman
Posted By Rico K Setyo
The photo was released by the White House today, the official portrait of the current occupants of 1600 Pennsylvania Ave. -- President Obama, 8-year-old Sasha, First Lady Michelle Obama and 11-year-old Malia. The photo was taken Sept. 1, and the subjects were all smiles.
The back story is anything but. Leibovitz is best known for her celebrity photos -- like the famous one she did of John Lennon and Yoko Ono the day the former Beatle was gunned down, or the one she did of a pregnant Demi Moore, posing nude.
But lately the photographer to the stars has been embroiled in a financial mess that could lead to bankruptcy and the loss of her photographic catalog. As Gawker.com put it, the Obama photo was taken one week before Leibovitz's deadline to repay a $24-million loan to "high-end artsharks Art Capital Group."
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Bankruptcy Options - 7, 11, and 13
By Joseph Devine
Posted By Rico K Setyo
Bankruptcy: the word alone may send chills up your spine. But so should the words "debt", "foreclosure", and "repossession". While bankruptcy may seem undesirable, intimidating, or downright embarrassing, in some instances bankruptcy can be a useful tool and may save you from a life mired in debt. Bankruptcy under chapters 7, 11, and 13 are available to both individuals and businesses, each with its own advantages and disadvantages.
Chapter 7
Chapter 7 is a liquidation bankruptcy. This means that, as an individual or business, when you file for Chapter 7 you agree to have some of your property liquidated to pay off your debts. Businesses that file for Chapter 7 will be dissolved and the assets liquidated to creditors. For individuals, some assets may be exempt, such as your home, tools of your trade, and retirement accounts.
The laws for exempt assets vary from state to state. All nonexempt items, however, are at risk of being liquidated under Chapter 7. While you may lose a significant amount of property, your debts will be immediately resolved and you can quickly begin to restructure your finances without the burden of debt.
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Perkins Twp. woman fights unethical debt collection
Posted by Stefanie Marty
By MELISSA TOPEY | Wednesday, October 21, 2009 1:00 AM EDT
PERKINS TWP.
A local woman who dared to question has given a black eye to one of the nation's largest debt collection agencies.
Andrea Schwarzentraub, 32, was distraught when she opened up a certified letter to find she was being sued by Midland Funding and Midland Credit Management for an alleged credit card debt of $4,516 from 2000.
Not recognizing any of the people she supposedly owed, she questioned the lawsuit. She attempted to get answers from the collection agency with the help of Sandusky law firm Murray & Murray.
"Most people wouldn't have questioned it," Schwarzentraub said.
U.S. District Court Judge David Katz ruled that Midland Funding used an illegal affidavit to sue Schwarzentraub and others when the company attempted to collect debts. The affidavit, signed by a Midland employee, stated the employee had personal knowledge of the debt.
A year and a half later, the debt still hasn't been proven. Katz did not rule on whether the debt belongs to Schwarzentraub, a matter that could go to trial.
Debt Collection
Posted By Adam Lindheim
By Arthur Epstein
During these gloomy times for the U.S. economy, many businesses are suffering. But some are uniquely positioned to do well when times are tough for most others, namely debt collection agencies and related companies.
The U.S. now has more than 6,000 debt collection companies, according to Kaulkin Ginsberg, a Maryland-based market research firm. Most of them are small, privately held entities. However a few debt collection agencies are publicly traded, including Portfolio Recovery Associates (PRAA) and IDT (IDT).
Although the debt collection business may get a bad rap when depicted in the movies or on television shows, it is actually a heavily regulated industry. While debt collectors may be tempted to use any tactics that will pry owed money from debtors' hands, they must comply with the federal Fair Debt Collection Practices Act, which prohibits deceptive, unfair, and abusive practices by third-party collectors; requires debtors to be treated fairly; and forbids certain methods of debt collection, including threats, abusive language, or harassment, such as repeatedly calling.
According to the Federal Reserve, the consumer credit industry increased from $133.7 billion of consumer debt obligations in 1970 to $2.5 trillion of consumer debt obligations in November, 2007, a compound annual growth rate of 8.2%. The Kaulkin Ginsberg report states the amount of outstanding revolving and non-revolving consumer credit increased at a compound annual growth rate of 6.4% from $1.3 trillion in June, 1997, to $2.5 trillion in June, 2007.
Bankruptcies: The Next Wave
Posted by Adam Lindhem
By Ben Steverman
Recent earnings reports show companies are slashing costs, paying off debt, and stockpiling cash. Meanwhile, economists see signs the economy is slowly improving.
Unfortunately, none of that could prevent a wave of bankruptcies by firms walloped by the recession and credit crisis.
That's the prediction of experts on bankruptcy, who say too many firms are loaded up with too much debt to survive the next year without defaulting on their debt obligations and filing for bankruptcy protection.
Standard & Poor's, for example, predicts the default rate for speculative-grade (i.e., junk-rated) companies to hit an all-time high of 14.3%—but not until the first quarter of 2010. The default rate was 9.25% last month, and just 0.79% back in November 2007. (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP).)
Corporate Bankruptcy
By Adam Lindheim
With the crashing of the American economy more and more corporate companies are filing for bankruptcy. In the first 5 months of this year 100 public companies filed for bankruptcy, the highest number since 2002. A company or individual files for bankruptcy when they pay their bills to their creditors in a timely fashion. Their debts outweigh their assets, and in these cases they turn to bankruptcy courts for protection. The courts will either liquidate their company or reorganize their business.
Bankruptcy is a legal procedure that is used by the U.S. bankruptcy code when a debtor is not able to make payments to its creditors. Bankruptcy is used as a safety net as it gives companies protection from their creditors which can no longer demand to be paid once bankruptcy is declared. The majority of corporate bankruptcies filed are either under chapter or chapter 11 of the bankruptcy code.
A chapter 7 filing typically leads to a liquidation of its business. This implies that the company has no intention of continuing to operate and is planning to sell off all of its assets. Proceeds from the sale are distributed to creditors in the order of their priority. A chapter 11 filing usually involves company reorganizing its business through the bankruptcy process with the hope that it will survive. When a company files chapter 11 it shields them from a creditors demands for payments and from lawsuits while it restructures it finances. Contract terms between the debtor and creditor can also be rewritten under the bankruptcy codes, something that is not as easily done without a bankruptcy filing. During a chapter 11 proceedings, the debtors reorganization plan must be accepted by a majority of its creditors.
General Motors the nations largest automaker had 172.81 million dollars in debt and 82.29 billion dollars in assets, according to their recent bankruptcy filling. They are currently trying to restructure their company so they can eventually prosper once again. They hired the consulting firm AP Services LLC who charged GM 23 million dollars for 90 days of consulting work. Bankruptcy laws have allowed GM to protect itself from its creditors and try to bring back their company.
As the number of corporate companies in the U.S. that are filing for bankruptcy continues to rise and reach record numbers, investors need to be aware of where and how they invest their money. Companies need to be more ethical with their operations, and conscious of how their operations are going in order to avoid bankruptcy.
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After Lehman Bankruptcy
Simmons & Simmons has advised hedge fund RAB Market Cycles Fund on the latest dispute in the Lehman Brothers bankruptcy saga. Simmons acted for RAB in relation to the status of post-administration cash derived from securities received by the failed bank after it went into administration. As a result of the ruling handed down on 21st October. City hedge funds could now see the money returned to the beneficiaries rather than falling into the general estate. RAB successfully argued that the post-administration cash held by Lehman as custodian was held on trust, and therefore under Financial Services Authority regulations should not fall into Lehman's general estate. The ruling will be seen as important by so-called prime brokerage clients, which currently have cash worth $3.3bn (£2bn) tied up in the administration.
Hundreds of hedge funds that were customers of Lehman Brothers and had their assets frozen when the bank collapsed can keep the cash generated by their portfolios in the 13 months since the investment bank was declared bankrupt. A High Court judge said yesterday that about $3.3 billion (£2 billion) in dividend, interest and other payments accrued since Lehmans entered bankruptcy on September 15 last year should go directly to the funds, rather than into a general pot for all Lehmans creditors. The decision is a setback for Lehmans’ non-hedge fund creditors, which had hoped to benefit from the constantly expanding pot of cash generated by frozen hedge fund holdings. PricewaterhouseCoopers (PwC), the bank’s European administrator, had kept confidential the names of and amounts owed to Lehmans’ European creditors, for fear that financial institutions could suffer if it became known that they had large Lehmans-related losses.
ehman Brothers Holdings Inc, the bankrupt investment bank, paid its lawyers and financial advisers $402.9m between September 2008, when it failed, and now, according to a filing with the US Securities and Exchange Commission.In total, 23 law firms, financial advisers, investment banks and consulting firms were paid in fees and expense reimbursements over the last 12 months. Restructuring firm Alvarez & Marsal LLC, which provided Lehman with its current chief executive officer, Bryan Marsal, was paid $169.2m in fees. The firm said it had about 175 full-time employees working on the bankruptcy.Weil Gotshal & Manges LLP of New York, the investment bank’s lead bankruptcy-law firm, was paid $98.5m, Lehman said in the filing.
Auctions, bankruptcy sales scheduled
A parcel at Hamilton and Pennsylvania avenues will be auctioned at 10 a.m. Wednesday at the Frederick County Courthouse, 100 W. Patrick St.
The land had been owned by the city, according to Harry T. deMoll, a substitute trustee, but was sold to Richard Romsberg. The land had been used at one time to park trucks and other equipment for the city's Public Works Department.
The Musket Ridge Golf Course on Brethren Church Road, Myersville , will be auctioned off at 11 a.m. Nov. 17 at the courthouse in Frederick .
The golf course includes a main clubhouse, banquet facility, maintenance building, driving range and putting green. The course was constructed in 2001.
A bankruptcy sale will be held at 9 a.m. Nov. 16 for Hubert R. Brown Construction Inc. on site at 11214 Angleberger Road, Thurmont .
The auction includes heavy construction equipment and trucks, shop equipment, tools, office furniture and other equipment.
Bankruptcy court allows Erickson Retirement Communities to pay staff
One of the nation’s largest builders of senior housing, Erickson filed for Chapter 11 bankruptcy protection Oct. 19. The Catonsville firm also said it will sell the company to Redwood Capital Investments LLC, controlled by Baltimore businessman Jim Davis, who is chairman of Hanover-based staffing agency Allegis Group Inc.
The court’s Oct. 20 ruling affects 794 employees who work for Erickson’s corporate division. Of those, 723 are full-time salaried employees, 65 get paid hourly and six are temporary workers. Though Erickson employs 12,000 throughout the country, but the remaining workers get paid by their individual properties and are not impacted by the ruling. Erickson oversees 19 housing campuses in 10 states.
In court documents, Erickson said it owes approximately $2.3 million in unpaid salary and other compensation to its employees on its next pay date. It also owes $6,000 in reimbursable expenses related to business travel, mileage and parking. The company pays $772,00 per moth, on average, on medical and vision insurance and another $167,000 a month on dental insurance.
After a company files for bankruptcy, all spending needs to be approved by the court.
Erickson filed bankruptcy after unsuccessfully trying to restructure its debt with its lenders. The company had been facing mounting financial pressures that forced it to stop work on all of its new developments. The stoppage affected seven developments in Kansas, Texas, Michigan, Illinois and Massachusetts.
Chairman John Erickson told his 23,000 residents across 10 states in a letter earlier this month that the company has to separate its real estate business from its property management business so its residents are protected from its financial troubles. Part of the bankruptcy process will include breaking off these two divisions.
Saturday, October 24, 2009
The good and bad of chapter 13 bankruptcy
by Michael Rivezzo
Filing Chapter 13 bankruptcy can actually be beneficial to you if you have failed redundantly to pay off debt . Chapter 13 can help people that still make a income and who want to avoid a foreclosure, while still being able to pay off some of their debts. This is why Chapter 13 is also called the reorganization bankruptcy.
Some of the positives of Chapter 13: you can still be able to keep real estate and some personal property. You can pay back some or all of your debt with a payment plan. This usually take 3-5 years to completely pay back the creditor. Creditors also stop calling and any legal action brought against you is nullified.
There are still some bad parts of Chapter 13. Your credit score will drop 200-250 points. The bankruptcy will stay on your report for 7 years. There is also fees that need to be paid regularly.Most people will not even qualify for Chapter 13 because there strict criteria for eligibility. You must have a regular source of income, while your gross income should be greater then the State median for your family size.
http://www.brainerddispatch.com/stories/101709/new_20091017032.shtml
http://blogs.wsj.com/economics/2009/10/23/qa-what-the-middle-class-recession-means-for-bankruptcies/
http://toledoblade.com/apps/pbcs.dll/article?AID=/20091002/BUSINESS07/910020354/-1/BUSINESS05
Identity Theft on the Rise
By Lorilyn Prestidge
Posted By Michael Rivezzo
Identity theft is the fastest growing crime in America.
And in light of increasing numbers, this week has been named, "National Protect Your Identity Week" by the National Foundation for Credit Counseling.It's a crime with more than ten million victims, including Catherine Estergren, who had checks stolen out of her mailbox."The bank called me after I didn't have any money in my account and I was way overdrawn," said Victim of Identity theft Catherine Estergren.
The thieves used Estergren's checks in five states and withdrew more than seven thousand dollars."I got all kinds of collection letters from all over these states," said Estergren.Estergren's story is a classic case of identity theft."It takes years and again tens of thousand of dollars to correct what has happened in maybe just a week or two or a month," said Austin Police Department Lt. John Mueller.
Click here to read more
States institute new rules that limit debt collectors
by Emery P. Dalesio
Posted By Michael Rivezzo
With many Americans in dire financial straits, states are cracking down to make sure aggressive debt collectors target only people who legitimately owe them money.
National consumer credit laws already prohibit collection agencies from harassing, deceptive or unfair practices like telling neighbors or family about what is owed, or calling before 8 a.m. or late at night. Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitation on collections and adding opportunities to punish abusive practices in court. Other states may follow suit.
Lawmakers are increasingly focusing on outfits that buy bad debt from credit card companies and other lenders for pennies on the dollar and profit when they collect more than they paidDebtors – some agree they owe money, others say they’ve already paid or are disputing their bills – have reported being bombarded with calls and subjected to foul language and threats of arrest or deportation.
A North Carolina law that took effect this month requires debt buyers filing collection lawsuits to produce documents proving they’re the ones owed the money. Trying to collect on a debt that a company should reasonably know is invalid could lead to lawsuits and civil penalties of up to $4,000 per violation.
Click here to read more
Thursday, October 22, 2009
Personal Bankruptcies
Written by Jane Birnbaum
Posted by Stefanie Marty
Bankruptcy is a procedure allowing debtors, both households and businesses, to eliminate some bills and repay others over time.
While bankruptcy is generally seen today as a protective measure for debtors, its ancient roots are punitive, a remedy on behalf of creditors. Early United States bankruptcy laws did not provide for a discharge of debts by debtors, only a liquidation of their assets. The roots of modern American bankruptcy are found in Congress’ Bankruptcy Act of 1898.
The Department of Justice’s United States Trustee Program oversees administration of bankruptcy law. There are five chapters of United States bankruptcy law, which apply to different situations:
Chapter 7: Used by consumers and businesses, it eliminates many debts such as credit card and medical bills not secured by collateral, in exchange for the liquidation of assets not protected by federal or state exemption laws.
Chapter 13: A debt reorganization plan chiefly used by individuals who want to keep possession of assets such as homes and cars by becoming current on delinquent loans and repaying unsecured debts according to their means.
Personal Bankruptcy on its highest Level since 2005
Written by Stefanie Marty
In the first nine months of this year 1,046,449 individuals filed for personal bankruptcy. This represents a 35% increase from the previous year, when 773,810 filed for personal bankruptcy during the same time period. At the same time consumer bankruptcy is on its highest point since 2005 when the system was overhauled. In 2005 and before the implementation of the new system the amount of personal bankruptcies in the first nine months of the year was 1.35 millions.
The new implemented law makes it harder and more expensive to file bankruptcy. Academics and lawyers believe that by the new law many borrowers have the wrong impression that they could no longer file. This unavailability of bankruptcy makes the current economic crisis even worse.
Typical reasons for bankruptcy are job loss, medical bills, and divorce. During the tough economic crisis there are more factors present that make the number of bankruptcy filings go up. Some of them are the rising unemployment, lower payments, fewer people with health insurance, and the mortgage and foreclosure crisis, but the most important one is probably the credit tightening. Due to the fewer lending by banks, it has gotten though and in some cases even impossible for consumers to get credits.
Robert M. Lawless, a professor at the University of Illinois College of Law, said: “With the consumer credit tightening and the economy in a nosedive, this pop could just be the beginning of a long-term rise in the bankruptcy filing rate to levels that are even higher than we had before the 2005 bankruptcy law.”
Wednesday, October 21, 2009
Bounce back fast after bankruptcy
Posted by Lily Mei
By Liz Pulliam Weston
Almost anyone can get credit soon after a bankruptcy. It's just a matter of knowing how.
It's true that bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your creditworthiness. But the effects don't have to be lasting.
Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms.
Nothing is forever
Ken from Chicago filed Chapter 7 liquidation after unemployment and overspending caused him to rack up more than $20,000 in credit card and other unsecured debt. Four years later, his credit scores ranged from 655 to 719, decent numbers that are just below the cutoff to get most lenders' very best rates.
Click here to read more
Your Credit Report After Bankruptcy
By: Lily Mei
Bankruptcy is generally considered as a last resort for managing your debt because the credit results are long-lasting and hard to repair. A bankruptcy stays on your credit report for 10 years, making it extremely difficult to get credit, buy a home, get life insurance, and sometimes even get a job. However, under the federal law, it is a required legal procedure for people who want to get a fresh start from their debts.
It is a long-standing battle once you file for bankruptcy because even you file a bankruptcy and voluntarily dismiss it before the discharge, the credit reporting agency must report the dismissal as well as the bankruptcy filing. Therefore, your credit is still affected by the dismissal. That doesn’t mean you won’t receive new credit after bankruptcy, credit is still available but it may be more expensive than before with lower available limits. Rebuilding credit worthiness after bankruptcy is difficult and takes time. It is a matter of using the credit cautiously and paying it on time to slowly improve your credit score.
Sources:
http://www.creditreporting.com/bankruptcy-credit-report.html
http://www.doney.net/faq_credit.htm
http://www.cardratings.com/bankruptcyconsumercreditrights.html
At Ethics Debate, Goldman Exec Defends Bonuses
Posted by: Lily Mei
One Goldman Sachs executive thinks the bank’s rich bonuses are a good thing, and he’s not afraid to say it.
Bumper payouts to bankers should be seen as part of a longer-term investment in London’s economy, the vice chairman of Goldman Sachs International, Brian Griffiths, told a debate on ethics at St. Paul’s Cathedral in London on Tuesday.
Defending lavish bonuses expected at the U.S. investment bank, Mr. Griffiths said he was not “ashamed” of his bank’s compensation package, which has inflamed the bonuses debate, Reuters reported.
The British public should “tolerate the inequality as a way to achieve greater prosperity for all” Mr. Griffiths, a former adviser to Margaret Thatcher when in power, said at the public meeting examining what role morality should play in the marketplace.
Goldman last week reignited the fight over excessive compensation after setting aside $5.4 billion for pay in the third quarter alone. It is on course to pay out $20 billion this year, infuriating critics in part because it comes so soon after repaying $10 billion in taxpayer bailout funds.
Mr. Griffiths said that if bonuses were capped the industry’s highest fliers would leave London’s financial services sector for other countries.
“I believe that we should be thinking about the medium term common good, not the short term common good… we should not, therefore, be ashamed of offering compensation in an internationally competitive market which ensures the bank businesses here and employs British people,” he said.
He also said Goldman rewarded only those who showed a commitment to company values and not simply to whoever brings in the most profit.
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Hate it when free credit reports aren't free? Tell the feds
By Diane C. Lade
Sun Sentinel (MCT)
FORT LAUDERDALE, Fla. - Federal trade regulators are changing the rules regarding how "free credit reports" are marketed, as required under the Credit CARD Act of 2009. And they want to hear from you.
The Federal Trade Commission is collecting comments on their proposed changes through Nov. 30. To submit electronically, go to http://public.commentworks.com/ftc/FreeCreditReportNPRM/. Or write: FTC, Office of Secretary, Room H-135 (Annex T), 600 Pennsylvania Avenue NW, Washington, D.C. 20580.
Among the agency's suggestions: Private companies that use "free credit report" in their name would be required to first send customers to a page explaining they are not AnnualCreditReport.com, the federally mandated centralized source.
Click here to read more
Posted By: Amy Nightingale
Tuesday, October 20, 2009
Underlining 'Free' in 'Free Credit Report'
Sunday, October 11, 2009
I've been meaning to pull my credit reports for some time.
I, like so many others, am concerned about identity theft or uncorrected errors in my credit files that might ding my credit scores.
When I finally got around to it, I knew to go to AnnualCreditReport.com or call 877-322-8228. I haven't been fooled by those ubiquitous commercials for FreeCreditReport.com with the goofy guy playing a guitar and complaining about how his life is messed up because he didn't check his credit report.
But the Federal Trade Commission has received many complaints from consumers who were misdirected from the official centralized site. Every person is entitled to a free credit report every 12 months from each of the three nationwide consumer reporting agencies -- Equifax, Experian and TransUnion.
Click here to Read More
Posted By: Sara Sindelar
It is great that the government is working on regulating which credit reports are the real thing without hidden fees. Credit reports are necessary to have and should be looked at once a year in order to see where you stand. It is hard with all the false advertising that is out there like freecreditreport.com that really in the fine print it not free. The FTC is allowing for the general public to way in on their view of false marketing and credit report regulations. We should take advantage of this opportunity.
Tips detail safeguards to combat ID theft
By Steve Wartenberg
THE COLUMBUS DISPATCH
More than 8,000 Ohioans last year became the victims of identity theft, a crime that's still sweeping the nation.
"It's the fastest-growing crime in the United States, and
10 million people in the United States were affected last year," said Ohio Attorney General Richard Cordray.
To mark National Protect Your Identity Week, which runs through Friday, he and other experts held a news conference to warn Ohioans of the dangers of identity theft and offer tips on how to avoid it and what to do if it happens.
State residents filed 8,237 identity-theft complaints with the Federal Trade Commission in 2008, up from 7,178 in 2007 and 6,878 in 2006.
"It's on the rise," said Cpl. Zach Scott of the Franklin County sheriff's office. "And when they get someone's (credit-card) information, what they do is start hitting them as fast as possible."
For example, Denny Hecker was an owner of 26 auto dealerships, the Advantage Rent-A-Car chain and other businesses was put in a tough financial situation earlier in October. Recently he had to declare bankruptcy for these businesses which put stress on his family also. A short time after he filed bankruptcy, his wife filed for a divorce. Financially Hecker was disappointing his family and they could not deal with it any longer.
There are people in this world who think that filing for bankruptcy during a divorce is a way to reorganize themselves for the future. Bankruptcy filings have increased steadily from 1988 to 2005 from about 500,000 to 1,700,000. The amount of women versus men who file has also changed.
Filing for bankruptcy during a divorce, and going through a divorce because of bankruptcy are both very real things that happen now a day. We have to remember that families are important to everyone but also that money will always be an issue.
Monday, October 19, 2009
Report finds new wrinkle in U.S. bankruptcies
By James B. Kelleher
CHICAGO (Reuters) - Recent bankruptcy filings by small U.S. businesses show a trend that could complicate lenders' efforts to identify at-risk borrowers, a new study reveals.
PayNet Inc, which provides analytic tools to the commercial credit industry, looked at 750 small business bankruptcy filers and found 50 percent were current with one or more of their lenders when they threw in the towel and sought protection from their creditors.
"Approximately half the lenders never saw it coming," PayNet President Bill Phelan said. "They were blindsided."
PayNet will officially release the study on Monday at the annual convention of the Equipment Leasing and Finance Association in San Diego.
The 750 companies PayNet studied collectively owed $58 million in loans, leases and lines of credit -- a tiny fraction of the 100,000 small businesses that PayNet said have filed for bankruptcy over the past year with an estimated $10 billion in obligations outstanding.
Click here to read more
Posted by: Amy Nightingale
Sunday, October 18, 2009
The outlook for the fashion industry is especially bleak in Japan. Women here, once the world’s most avid luxury shoppers, are turning to cheaper, more casual fashion in the middle of a prolonged downturn.
Low-cost brands like Uniqlo and the Swedish casual fashion retailer Hennes & Mauritz have become the labels of choice for many Japanese.
Just this week, Gianni Versace, the Italian fashion brand, announced it would close its Japanese stores as demand for luxury goods continued to decline. Versace Japan had sales of 1.6 billion yen in 2008 (about $18 million at today’s exchange rates) compared with 4.1 billion yen four years ago.
Friday, October 16, 2009
Is CIT Next in the Line of Bankruptcy?
By: Sara Sindelar
CIT Group, Inc. is “a large American commercial and consumer finance company included in the Fortune 500 and the S&P 500 index. CIT's Commercial Finance business offers secured lending, leasing and factoring products.”
CIT is on the brink of declaring bankruptcy if they do not get bondholders approval for the $29 Billion debt exchange/swap. This is a swap of “unsecured obligations for new secured debt and preferred shares”, in effort to avoid bankruptcy.
There is a prepackage Bankrupt plan where bondholders will “receive 70 cents on the dollar in form of new 7% notes and 83.4 % of equity in reorganization” of the company. CIT has $75 million in assets which contributes to many small and medium sized businesses. CIT is a critical part of the supply chain of the retail industry and will have harsh affects on it if it declares bankruptcy. “A Collapse would ripple the ‘small and medium sized business who rely on the finance company to operate,” speaker from CIT.
It is stated that if CIT goes bankrupt it could be the 5th largest bankruptcy to date. Though, if bondholders approve the swap their $29 million debt could be reduced by 30%. The now CEO, Jeffrey Peek, has declared he will resign at the end of the year and there is a board in place to find his replacement. This bankruptcy could cause a major stir up in the economy and it is up to the bondholders to make the choice of the swap.
http://www.bloomberg.com/apps/news?pid=20601103&sid=adkNpcgSTTeo
http://www.boston.com/business/articles/2009/10/14/chief_of_troubled_cit_plans_to_resign/
http://www.bloomberg.com/apps/news?pid=20601103&sid=agRAQzb5M3cg
http://www.washingtonpost.com/wp-dyn/content/article/2009/09/30/AR2009093004993.html
DSB Bank Must Find Buyer or Face Bankruptcy
By BART KOSTER
The court told unlisted DSB Bank, which was placed into administration Monday by the Dutch Central bank after a run on deposits, that it has until 11 a.m. local time to talk with "major banks" to find a buyer.
If no "realistic chance" for a takeover of the privately owned Dutch savings and mortgage bank can be worked out, DSB will be declared bankrupt, the court said. If a takeover can be worked out, the case will be discussed in a closed court session later Friday, it added.
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Largest Bankruptcies
Lehman Brothers tops this list with assets totaling 691 billion dollars. Lehman Brothers was once a very highly regarded investment firm on Wall Street. The filled for bankruptcy protection on Sept. 15th of last year.
Number two on this list is Washington Mutual, a once very powerful and large savings and loan bank. “WaMu” filed for bankruptcy after customers withdrew deposits totaling 16 billion dollars in only ten days. Washington Mutual’s assets totaled 327.9 billion dollars.
WorldCom, which is at number three in the top ten bankruptcies, is the only bankruptcy in the top four that has not occurred in the past two years. This bankruptcy occurred in July of 2002. WorldCom was at one point, the second largest telecom company. WorldCom was forced to file bankruptcy after being caught up in a 11 billion dollar accounting scandal. At the time of the bankruptcy filing, WorldCom’s assets totaled 103.9 billion dollars.
Although inflation does account for why older bankruptcies have been “out done” by other companies on this list, the recession itself did not help the bankruptcy situation.
Thursday, October 15, 2009
Big Companies Face Big Problems
The following ten companies were perceived to be at a very high risk of going bankrupt. The ranking was done by the markets perceived bankruptcy risk- Market Cap (MC) divided by the Enterprise Value (EV). In order from the most risky to least is at number one Hertz, Textron, Sprint Nextel, Macy’s, Mylan, Goodyear, CBS, Advanced Micro Devices, Las Vegas Stand, and at tenth Interpublic Group.
The nations ‘Big Three’ automakers, Chrysler, Ford, and GM face enormous discussion when it comes to bankruptcy as well. Congress asked the three companies to provide a $25 million dollar bailout plan saying that the worse is still yet to come. People are unable to pay for the cars they have bought and as more and more people turn to Chapter 13 these companies face the tough challenge of staying afloat. GM informed 1100 dealerships they would be cut in 2010. It’s a terrible cycle for everyone, with these cuts thousands of families will lose incomes and then who can really buy a car, none less feed their children?
Wednesday, October 14, 2009
Hospital Bankruptcy
In this type of economy we know businesses are going to start filing for bankruptcy. But one of the saddest things I see is the fact that hospitals are getting hit very badly financially. These are the places that take care of us when we’re sick and dying. These are the types of places that really need to be held together.
At the start to the downturn of this economy, South Beach hospital in Florida filed for Chapter 11 bankruptcy protection after listing debts totaling more than $5.3 million. They hospital had to discharge its patients and dismiss all employees except for a small clean-up crew.
Just today, Michael Reese Hospital in Chicago, Illinois filed for Chapter 11 bankruptcy as it has racked up between $50 million and $100 million dollars in debt. They also owe $19.4 million to their unsecured creditors and a substantial amount to Medicine Industries Inc. who owns the property and leases the hospital to Michael Reese.
There should be some dedication and responsibility to maintaining these hospitals. For example, another hospital in Chicago, Mercy Hospital, almost filed for bankruptcy four years ago. Thankful for them though they had gained good recognition and support from their community. The mayor was born at Mercy Hospital and couldn’t let it go so he and the Mercy staff made some very strategic decisions in order to refinance the hospital.
Posted by: Kelsey Hoffman
References:
http://www.chicagobusiness.com/cgi-bin/news.pl?id=31200&seenIt=1
http://southflorida.bizjournals.com/southflorida/stories/2006/02/27/daily38.html
http://www.suntimes.com/news/watchdogs/1821278,CST-NWS-watchdogs13.article
Tuesday, October 13, 2009
Chicago Sun-Times Faced with Bankruptcy
CHICAGO — The way The Rev. Issac Whittmon sees it, a vital piece of his city was saved Thursday when a bankruptcy judge approved the sale of the Chicago Sun-Times, a newspaper he's been reading since he was a child.
"If we lost Wrigley Field, that's the way I would feel if we'd lost the Sun-Times," the 67-year-old minister said, after hearing on the radio that the newspaper's parent company can be sold to Chicago businessman Jim Tyree.
Without a deal, the Sun-Times, whose roots date to 1844, could have faced a shutdown, following a path already taken by other No. 2 publications in two-newspaper towns such as Seattle and Denver.
Monday, October 12, 2009
Bankruptcy court OKs Six Flags settlement deal
Associated Press
By ALAN SAYRE , 10.08.09, 04:41 PM EDT 
NEW ORLEANS -- A settlement over Six Flags Inc.'s lease with New Orleans for the site of the defunct Six Flags New Orleans theme park was approved Thursday by a federal bankruptcy judge in Delaware.
Approval comes amid plans for a startup company, Southern Star Amusements of Baton Rouge, to take over the site and develop a Nickelodeon-themed park.
Under the agreement, Six Flags (SIX - news - people ), which is in bankruptcy reorganization, will pay the city $3 million and 25 percent of any insurance proceeds Six Flags recovers from Hurricane Katrina damage above $65 million.
Under Southern Star Amusement's plan, the new development would cost $165 million to $170 million. Nickelodeon, a unit of Viacom Inc.( VIA - news - people ), will get a licensing fee and the city will retain a leasing arrangement with Southern Star. There will be no local public funding used to construct the park.
NEW ORLEANS -- A settlement over Six Flags Inc.'s lease with New Orleans for the site of the defunct Six Flags New Orleans theme park was approved Thursday by a federal bankruptcy judge in Delaware.
Approval comes amid plans for a startup company, Southern Star Amusements of Baton Rouge, to take over the site and develop a Nickelodeon-themed park.
Under the agreement, Six Flags (SIX - news - people ), which is in bankruptcy reorganization, will pay the city $3 million and 25 percent of any insurance proceeds Six Flags recovers from Hurricane Katrina damage above $65 million.
Under Southern Star Amusement's plan, the new development would cost $165 million to $170 million. Nickelodeon, a unit of Viacom Inc.( VIA - news - people ), will get a licensing fee and the city will retain a leasing arrangement with Southern Star. There will be no local public funding used to construct the park.
Chicago Cubs file for bankruptcy as part of sale
WILMINGTON, Delaware (Reuters) - The Chicago Cubs baseball team filed for bankruptcy on Monday as part of the team's planned sale to the Ricketts family by the Tribune Co, according to court documents.
The Cubs bankruptcy is aimed at shedding any claims on the team related to the bankruptcy of Tribune Co, a media conglomerate.
As part of the agreement that received the approval of a bankruptcy court last month, Tribune will contribute the Cubs, Wrigley Field and its stake in a sports television network to a new company.
to read more click here
Saturday, October 10, 2009
Chrysler is Trying to Hang On
By: Sara Sindelar
Chrysler filed for bankruptcy back in April and have been dealing with the roller coaster ride of bankruptcy. The company sold all of their assets to the automaker Fiat back in April. Last month, Chrysler documented a net loss of $344 billion. The government, creditors, debtors and Chrysler have been working through this bankruptcy since April with a lot of back and forth and arguing.
This past week there has been a heated debate between sides at the Turnaround Management Associations annual conference. They are trying to conclude if the government’s involvement is too much. They were in court re-debating if selling Chrysler to Fiat was a good idea. For adults in such a professional setting things got very heated in this debate about if or it not the government’s involvement is against the Bankruptcy Code. There seems to be continuous hostility between the sides Thomas Cullen and Thomas Lauria over the issues of this Chrysler bankruptcy.
The bankruptcy details have awhile to fill in and be fixed along with the rest of the auto industry. This economy will continue to cause companies to file bankruptcies and creditors to ask for the money. All we can do it work through them and hope for the best while working through them in the least hostile way.
http://www.nytimes.com/2009/05/01/business/01auto.html
http://blogs.wsj.com/bankruptcy/2009/10/09/sparks-fly-in-chrysler-debate/
http://www.bloomberg.com/apps/news?pid=20601087&sid=aYWWNSAS8yRk
Friday, October 9, 2009
Sparks Fly In Chrysler Debate
POSTED BY: SARA SINDELARThere wasn’t any chair-throwing, but a debate involving two opposing lawyers in the Chrysler bankruptcy case got pretty heated Thursday.
Arguing over whether the government’s powerful role in the Chrysler bankruptcy proceeding signals the end of a key tenet of the Bankruptcy Code, Jones Day trial lawyer Thomas F. Cullen Jr. and White & Case’s restructuring head Thomas E. Lauria again took up their adversarial roles in a debate that at several points got a bit rowdy and led Cullen to ask: “Are we on Jerry Springer?”
Lauria, you’ll recall, led a group of Chrysler’s lenders who fought the sale of the auto maker to a company controlled by Italy’s Fiat SpA. Lauria, called a “terrorist” by a government lawyer, had argued that the sale was an attempt to avoid playing by the rules of Chapter 11 and wrongly rewarded junior creditors ahead of the senior creditors. The U.S. Bankruptcy Court in Manhattan and the 2nd U.S. Circuit Court of Appeals rejected Lauria’s argument, which was the hot topic that Lauria, Cullen and others revisited Thursday at the Turnaround Management Association’s annual conference in Phoenix.
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Thursday, October 8, 2009
Why Americans are Filing for Bankruptcy
By: Lily Mei
Back then, bankruptcy was referred as a shameful and humiliating failure but now more and more Americans file for bankruptcy as second nature to solving their finances.
Many Americans who file for bankruptcy are those who are drowning in medical bills or credit card debt with no realistic hope of ever paying it off. It is a much easier way of deferring your financial responsibilities then dealing it by yourself with collection agency calls, wage garnishment, and threat of lawsuits.
Bankruptcy is also less of a financial, emotional and social strain in many cases. Instead of living in years of hell to pain-staking pay off your debts by saving money and living frugally, by filing for bankruptcy you may be able to actually clear off everything in a few months. In addition, bankruptcy is not look upon badly or disgraceful as it once was in the past. So in the case where you are in a financial crisis to pay off your debts, maybe you should look into filing for bankruptcy to ease the strain.
Sources:
http://mwhodges.home.att.net/nat-debt/debt-nat.htm
http://www.pbs.org/now/politics/bankruptcy.html
http://ezinearticles.com/?10-Reasons-Why-People-File-For-Bankruptcy&id=3022051
Of Layoffs, Bankruptcy and Bonuses
By David Carr
Let’s say that a group of corporate executives uses scads of debt to take over a struggling company, sells off some profitable assets, lays off thousands of employees while achieving miserable results. And then, less than a year after saddling the company with $8 billion in debt, they opt for bankruptcy.
You’d expect them to walk the plank, or at the very least, spend a good stretch of time in the naughty corner. But you wouldn’t expect the top 700 managers to collect $66 million in bonuses.
But that’s just what might happen at the Tribune Company. A week ago Friday, lawyers for the company, which publishes The Los Angeles Times, The Chicago Tribune, The Baltimore Sun, and owns other newspapers and television stations, were in Federal Bankruptcy Court in Delaware suggesting that the proposed 2009 bonuses were critical for the health and survival of the company.
Under questioning, Chandler Bigelow III, the chief financial officer, said the bonuses would help “incentivize our key managers to battle all of the intense challenges that unfortunately our local media businesses are facing,” according to The Associated Press.
The unsecured creditors of the Tribune Company filed a letter in support of the incentives, and its senior lenders support the plan as well. But both the company’s union and the trustee appointed to oversee the bankruptcy raised objections, arguing that the bonuses would be the highest ever paid — even as the company has its lowest cash flow in 10 years.
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Wednesday, October 7, 2009
How to Avoid Bankruptcy
Since personal bankruptcies are at the highest now since the laws on bankruptcy were changed in 2005, it is crucial that individuals start looking into what would help them avoid actually filing for bankruptcy. If one was leaning toward the idea of bankruptcy, it might be interesting that bankruptcy isn’t always the best option. Bankruptcy isn’t necessarily a “clean slate”. Bankruptcy can sometimes not eliminate a significant amount of debt to offset the bad credit score as well as other consequences it creates. One way to avoid bankruptcy is setting up a strict budget. With this, one can slowly bring down debts little by little. Also, one can try to make money in other ways. One can start working more hours, maybe sell or downsize extra cars/homes, etc. You can also negotiate with your creditors in downsizing your debts to them. You can do this with a debt consolidation program or a debt reduction/settlement program. Also, if you explain to your creditors that you may be facing bankruptcy, they will be more willing to help you with your payments. This is because they would most likely rather get some money that you owe them rather then possibly not getting any money. These are all, maybe not the easiest ways, but ways that one can try to eliminate debts. Debts cannot be relieved overnight, so it is imperative to realize that this must be worked on and it may take some time but in the long run it might be a better choice than filing bankruptcy.
Firm seeks SEC probe of Hertz over bankruptcy suit
BY: Emily ChasanNEW YORK, Oct 7 (Reuters) - The financial research firm that Hertz Global Holdings Inc (HTZ.N) sued over a report that said it could go bankrupt is fighting back, and has asked U.S. regulators to investigate Hertz's attempts to involve other companies in its suit.
Audit Integrity, which issued a Sept. 15 report that included Hertz among 20 large companies "most likely to declare bankruptcy" within a year, said it sent a letter on Monday to U.S. Securities and Exchange Commission Chairman Mary Schapiro.
The letter asked the investor protection agency to investigate Hertz's "blatant attempt to induce more than 19 companies to consider legal action against Audit Integrity because of a critical report."
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Posted By: Nicole Nelson
With so many people being affected by the harsh economy the amount of Chapter 7 bankruptcy is still on the rise. Chapter 7 is often referred to as a “fresh start.” Essentially after filing for Chapter 7 you are cleared of all your debts.
On October 17, 2005 a new law, Bankruptcy Abuse and Consumer Protection Act also known as BACPA, came into effect that made it harder for people to prove that they are actually in need of being cleared of all their debts. The general idea was to shift the amount of people who filed for Chapter 7 to file to Chapter 13 which is more like Chapter 11. Chapter 13 does not clear you of your debt rather is a repayment plan. The new laws help prove that people are cable of paying portions of their debt back and should not be given a free ride. The new laws also placed requirements on lawyers making it harder and more expensive to hire a lawyer for bankruptcy cases. Some lawyers have even raised their prices by as much as 100%.
The new laws have not seemed to be effective for two main reasons. First there was too much emotion that went into making the law. People don’t generally file for bankruptcy because they are bored rather because they actually have no means to pay off debt. Secondly although the law has changed the economy has as well. People now more than ever are struggling with finical debt.
Tuesday, October 6, 2009
Is CBS really going bankrupt?
Two weeks ago, we noted that CBS had been pinpointed by Audit Integrity as one of 10 big companies at risk of bankruptcy.
This prompted an outraged denial by CBS.
As the banking collapse illustrated, any time a company denies that it's about to go bankrupt, it makes sense to assume that the company is indeed about to go bankrupt--and then analyze the situation for yourself.
We've now done that for CBS. Here's the bottom line:
CBS is not on the verge of bankruptcy. The company is, however, highly leveraged, and its cash flows have been deteriorating rapidly. So if current trends continue, the company will be forced to cut more costs or risk violating debt covenants. If CBS's cash flows keep deteriorating after that, it will very much be on the verge of bankruptcy.
CBS has also blown billions in recent years stupidly buying back its own stock at much higher prices--shareholder value destruction at its finest. So the company's weak financial position is very much of its own making.
Monday, October 5, 2009
Bank Failures in 2009
Three regional banks failed in Michigan, Minnesota and Colorado, raising the national tally. The closures will cost FDIC $293.3 million.
By Hibah Yousuf, CNNMoney.com contributing writer
Last Updated: October 5, 2009: 11:25 AM ET
NEW YORK (CNNMoney.com) -- Three regional banks were closed by regulators on Friday evening, bringing the 2009 tally to 98.
Warren Bank, based in Warren, Mich., Jennings State Bank in Spring Grove, Minn., and Southern Colorado National Bank, Pueblo, Colo., were the latest to go down.
Customers of all three banks are protected, however. The Federal Deposit Insurance Corp., which has insured bank deposits since the Great Depression, currently covers customer accounts up to $250,000.
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Peanut Corporation of America’s and Salmonella
By: Sara Sindelar
Earlier this year there was a recall on peanuts after almost 4,000 people were counted sick and an associated 9 deaths. After Peanut Corp. of America made the recalls they declared bankruptcy. PCA is no longer operating and there continues to be a recall on all their products made in their facilities since January 1, 2007.
PCA had to go back to U.S. Bankruptcy Court to discuss the distribution of money to those who suffered. Yesterday, October 1, 2009 U.S. Bankruptcy Court agreed to have the Peanut Corporation of America issue $12 million to a fund for those who were harmed by salmonella. The claims for their money are due at the end of October. The $12 million will come from Hartford Insurers, PCA’s insurance carrier.
I am surprised that it has been almost a year and these claims are just coming in for compensation for the illnesses these people suffered from peanuts. Though PCA should have to pay for their mistakes they are already in enough trouble with bankruptcy and closer; what is to say they will drop the ball on paying back those harmed.
http://www.newsinferno.com/archives/13198
http://www.cnn.com/2009/HEALTH/10/01/virginia.peanut.fund/
http://www.google.com/hostednews/ap/article/ALeqM5jPLaDKNW3MkO750a8_3Rqb14nexQD9B2IU380
http://www.foodsafetynews.com/2009/09/-for-the-survivors-of/
Sunday, October 4, 2009
Consumer Bankruptcy Filings on the Rise
Personal Bankruptcy Filings Soar
The number of personal bankruptcy filings for the nine months rose to 1,046,449 as of Sept. 30, the American Bankruptcy Institute, an organization made up of attorneys, accountants and other bankruptcy professionals, said Friday, using data from the National Bankruptcy Research Center. There were 773,810 personal bankruptcy filings for the same time period in 2008.
September's filings reached 124,790, 41% higher than the same month last year.
Friday, October 2, 2009
Fed Draws Court's Eyes in Lehman Bankruptcy
By JEFFREY MCCRACKEN and MIKE SPECTOR
A court-appointed examiner investigating Lehman Brothers Holdings Inc.'s bankruptcy has been exploring whether the Federal Reserve improperly cut in front of other creditors owed money in the $613 billion bankruptcy case, records show.
Billing records filed with the court show the examiner is investigating an issue that has angered many of Lehman's creditors: how the Federal Reserve and the New York Fed -- which lent Lehman $46 billion in cash and securities before its bankruptcy filing last September -- were paid promptly and in full, while tens of billions of dollars in other debts were left to be sorted out in court. It remains unclear when and how much Lehman creditors will be repaid.
The examiner, Anton Valukas, chairman of law firm Jenner & Block LLP and a former U.S. attorney, said, "I am under a court order not to discuss what we are doing or how we are doing it."
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POSTED BY: SARA SINDELAR
Thursday, October 1, 2009
Is Bankruptcy A Good Way Out of Debt?
Bankruptcy as always been seen in both a positive and negative way. The word its self might make people scare people. There are two types of common bankruptcy that people file for, Chapter 13 and Chapter 7. Chapter 7 in a sense wipes you clear of your debt and you get what’s known as a “fresh start”. Chapter 13 allows you to set up a five year payment plan. Last Year alone 445,574 cases were filed of Chapter 13. Some people hear bankruptcy and think of it as a relief and a way out rather than a scary thing that will haunt you forever. So the real question is whether or not bankruptcy is the way to go when it come to getting out of debt
The truth is that bankruptcy will give you a sudden relief from your responsibilities, however does follow you for years if not your whole life. Bankruptcy can stay on your credit for up to ten years and will stay on your public record for life. When applying for a job or credit, if asked you must by law state you have filed for bankruptcy. This itself hurts your opportunity to move forward and it becomes harder to take out any loans if you are strapped for money. So when thinking about getting out of debt, bankruptcy might not be the way to go.
http://money.cnn.com/2005/04/20/pf/bankruptcy_bill/index.htm
http://www.cleardebtsolution.com/Bankruptcy.php
Wednesday, September 30, 2009
Extended Stay Hotel Chain Files For Bankruptcy
Extended Stay Hotels is a privately owned hotel brand that operates in the extended stay hotel market. The chain operates over 680 hotels with approximately 76,000 rooms across the United States and Canada. They cater to budget conscious travelers who are looking for value over elegance. David Lichtenstein acquired the chain in 2007 for eight billion dollars. This occurred at the peak of the real estate market and the first mortgage was estimated to be $4.1 billion dollars.
In June, it was announced that the company filed for bankruptcy projection. They proceeded by proposing a plan supported by creditors to enable them to get their money back. However, it would wipe out $4.8 billion in debt which would hurt most of the existing creditors.
Currently, the bankruptcy lawsuit is beginning. Ralph Mabey, an ex-bankruptcy judge was chosen by a New York Bankruptcy Court to investigate further into the acquisition of Extended Stay. Starwood Capital Group, another leader in the hotel industry is attempting to take control of Extended Stay Inc. They would buy Extended Stay’s $4.1 billion dollar first mortgage which was put into commercial mortgage-backed securities.
Sources
http://online.wsj.com/article/SB125426690932550897.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsForth
http://www.reuters.com/article/privateEquity/idUSN3020853220090930
http://www.bloomberg.com/apps/news?pid=20601103&sid=a3wjfb5npFto
Six Flags Goes Bankrupt
As a result of all this turmoil, the company plans to discount passes for 2010 in order to counteract the suffering economy. They’ve announced that their newest attraction next season, the Tornado, will be a 60-foot funnel-shaped water ride that will be part of Hurricane Harbor Water Park. Their other rides will continue to attract their customers.
http://www.bloomberg.com/apps/news?pid=20601103&sid=atNAcbVRbTjE
http://online.wsj.com/article/SB124489639859012503.html
http://www.huffingtonpost.com/2009/03/14/six-flags-nearing-bankrup_n_174954.html
Tuesday, September 29, 2009
How Living Wills Could Help Banks
In theory, living wills would minimize systemic risk by providing central banks with a road map for supporting, nationalizing or abandoning problem institutions, or parts of them, especially if they have operations all over the world. When Lehman Brothers collapsed, for instance, it was impossible to transfer some essentially healthy businesses to new owners. There were too many legal entities in different countries. A clearer and simpler legal structure could have reduced the pain.
Global banks need to have a fragmented anatomy to be capable of being broken up easily. But as things stand, they are so complex that any attempt at dismantling them would be like unscrambling an egg. The complications largely results from structures designed to minimize tax. But while an increase in the tax revenue from banks would be an indirect bonus of living wills for governments, it shouldn’t be the government’s sole reason to allow them.
In practical terms, the goal should be for many banks to look more like HSBC. The lender’s major subsidiaries are all incorporated entities, with their own capital bases and balance sheets. At the moment, most banks look more like Barclays. A single firm dealing with the bank might have contractual arrangements with a dozen or more legal entities in several jurisdictions, but capital is held at group level.
The shift would require many lenders to undergo substantial legal reorganization. This could take more than five years, say bankers.. There is also a risk that if living wills are transparent or easily deduced, banks could become the target of mischief from, say, hedge funds.
But these aren’t reasons to defer work on living wills.
Monday, September 28, 2009
The Bankruptcy Files: Simmons, Velocity Sold in Chapter 11
The Bankruptcy Files: Simmons, Velocity Sold in Chapter 11
By, Brian Baxter
Posted By: Amy Nightingale
Leading U.S. mattress maker Simmons Company is the latest retailer to succumb to economic pressures. On Friday, the company announced a bankruptcy reorganization plan that will result in the sale of the bedding company to a private equity consortium.
The second-largest mattress maker in the U.S. by revenue, Simmons follows smaller competitors like Dial-A-Mattress into a Chapter 11 slumber that has resulted in the company's sale to a new buyer.
Weil, Gotshal & Manges bankruptcy partner Michael Walsh, M&A partners Steven Peck and Joseph Basile, finance partner Kelly Dybala, antitrust cochair Helene Jaffe, and tax partner Scott Sontag are advising Simmons on its bankruptcy and subsequent sale to Los Angeles-based private equity firm Ares Management and the Ontario Teachers' Pension Plan.
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Auto-parts maker Holley files for bankruptcy
WILMINGTON, Del., Sept 28 (Reuters) - Holley Performance Products, a maker of high-performance carburetors and automotive fuel-injection systems, filed for bankruptcy on Monday, its second filing in less than two years.
The privately held company, which is a major supporter of drag racing and NASCAR racing, said in court documents that sales have fallen as much as 40 percent since it emerged from bankruptcy last year.
In addition, the company's business supplying emission control components to vehicle makers suffered as a major customer, Caterpillar Inc, discontinued a line of truck engines.
Thomas Tomlinson, the company's co-chief executive and chief financial officer, said in court documents that Holley has been negotiating with holders of the company's first-lien secured debt to restructure its finances.
The company rejected a forbearance proposal by debt-holders including Wells Fargo Foothills Inc, as the administrative agent, and Regiment Capital Special Situations Fund IV LP, which Tomlinson said would have taken $2.5 million out of the business.
Sunday, September 27, 2009
Bankruptcy Judge Clears Sale of Cubs
WILMINGTON, Del. - A federal bankruptcy judge cleared the way Thursday for the Tribune Co. to sell the Chicago Cubs and the storied Wrigley Field to the family of billionaire and longtime fan Joe Ricketts.
Judge Kevin J. Carey authorized Tribune to sell the family a 95 percent stake in the team, the stadium and related sports properties for $845 million.
Lehman Brothers Bankrupt, Creditors Looking for Their Money
By: Sara Sindelar
Lehman Brothers collapsed back in September 2008 at the start of the financial crisis. As we all know the impact this one company’s collapse made on the economy worldwide. With thousands of jobs lost, billions and billions of dollars lost it was a day to remember. Now, a year later, they are in court working with their bankruptcy filing.
Lehman Brothers Bankruptcy is still feeling the heat as creditors are knocking at the door for their share. After they filed for bankruptcy in September 2008 they have been working through the steps and battling in court. Last week 16,000 creditors knocked on the door for their money. Lehman is still waiting for many creditors paper work to come through making an estimated total of over $1 trillion worldwide.
These creditors are coming from all over the world. Many companies from
Sources:
http://www.youtube.com/watch?v=AYKhtLc6ye0
http://www.google.com/hostednews/afp/article/ALeqM5jlOUdghhcT3rjx0hJW3JUtBifASQ
http://www.bloomberg.com/apps/news?pid=20601103&sid=aAW5NLgHTOMU
Bankruptcy Judge Gives O.K. to Sale of the Cubs
POSTED BY: Sara Sindelar
By RICHARD SANDOMIR
A federal bankruptcy court judge in Delaware on Thursday approved the Tribune Company’s $845 million sale of the Chicago Cubs to the family of Joe Ricketts, the founder of the TD Ameritrade discount brokerage. One of his sons, Tom, will be the controlling owner.
The sale still must go through a Chapter 11 bankruptcy filing of the Cubs on Oct. 12, to divest the team of debt associated with Tribune, and a three-quarters vote of Major League Baseball owners. The team’s bankruptcy process is expected to be quick and could be approved at a hearing scheduled for Oct. 13.
In signing the approval order, Judge Kevin J. Carey said, “The evidence demonstrates” that Tribune “has a sound business reason” for the transaction. He wrote in the order that the sale “represents the best proposed transaction for the Cubs business,” and that the Ricketts family has “acted reasonably, properly and in good faith.”
Carey will also preside over the Cubs’ bankruptcy.
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